‘‘We have to be very cautious when the source is Swatch Group internal. I have not the intention to endanger the whole system.’’ Mr. Rentsch, the group’s general counsel, denied any wrongdoing. According to him, the two whistle- blowers were former disgruntled employees who ‘‘were trying to build up something against the company.’’ Still, the company was concerned about the allegations and decided to set up an internal investigation. In comments to the press, Swatch pointed out that transfer pricing is a very complex issue that depends on a large number of variables including: exchange rates, working conditions in different countries, and differing distribution structures. Also, as a matter policy, Swatch tries to avoid major price gaps between markets in order to minimize the risks of gray markets where local traders sidestep authorized distributors