Jewellery company Tiffany & Co. must pay the world's largest watchmaker, Swatch Group, 402 million Swiss francs ($448.79 million) for breaking a cooperation agreement, the Arbitration Institute in the Netherlands has decided. Tiffany will also have to pay $8.8 million in legal costs.

Swatch and Tiffany entered into a collaboration agreement in 2007. The contract was for 20 years, with a possible extension for another 10 years, and its details were not disclosed. It was assumed that Swatch would produce watches under the Tiffany brand, and they would be sold in the group's stores and the jewelry company. At the time, Swatch estimated the potential income from this partnership at 500 million euros "in the medium term."

But the partnership fell apart before it even began. In September 2011, Swatch broke its contract with Tiffany and filed a lawsuit in the Dutch arbitration court. Swatch accused Tiffany of slowness and demanded compensation of 3.8 billion francs ($4.2 billion). The partner had lost interest in the deal and was systematically trying to block Swatch’s business development, the company believed. Tiffany filed a counterclaim for 542 million francs and expressed dissatisfaction with Swatch selling watches through Tiffany’s competitors.

Tiffany CEO Michael Kowalski said the company was "shocked and extremely disappointed" by the court's decision. In his opinion, the payment of this amount will not affect Tiffany's plans in the long and short term. But after the court's decision was published, Tiffany had to lower its forecast for financial indicators for 2013 (the fiscal year ends on January 31, 2014), writes the Financial Times. According to the November forecast, profit per share was expected to be $3.65-3.75, now the company has reduced the forecast by almost 60% - to $2.3-2.35 per share. Because of the fine, it will have to write off from $295 million to $305 million in the fourth fiscal quarter. For the first nine months of 2013, Tiffany's revenue was $2.7 billion, profit - $285 million.

Watches worth $450 million