The importance of the watch industry to local economies, fear of outside
competition, and the cooperation inherent in the system helped lead to the
formation of a cartel. From the 1920s through the 1960s, the activities of the
Swiss watch firms were coordinated by negotiations within and among associations
of firms. The associations regulated competition, arbitrated differences
among members, and spoke for the industry in its relations with government
(Brengel and Rug0 1961, 12). The geographic concentration of the industry
allowed the firms to negotiate and monitor tightly the collusive arrangements.
Proximity and interdependence had drawn the watch firms together. Information
about the industry, and in particular about attempts to deviate from industry
norms, traveled quickly through the watchmaking portion of northwestern
Switzerland, though little information was shared with those outside the area.
Geographic concentration also prompted government intervention, as the
Swiss government hoped its actions would improve employment prospects in
an area that relied heavily on the watch industry. In freezing industry structure,
the agreements ensured that watch production in the Jura area would remain
fragmented.