Luxury watchmaker Richemont signed a contract to buy mechanical watch movements from Swatch Group from 2020, sources close to the matter told Reuters at an industry event in Geneva on Wednesday.

Swatch’s obligation to supply movements to rival watchmakers is due to end in 2019.

Swatch Group supplies most of the Swiss watch industry with movements from its ETA manufacturing facility, including Richemont which makes watches under brands including Cartier, IWC and Piaget.

The downturn in tourism to Europe and fewer sales in Hong Kong and China has been punishing to the watch industry this past year, and Swatch is no exception. However, the Swatch Group still remains the largest watch company in the world, owning 18 brands spanning all price points, from Breguet to the accessible iconic Swatch label.

But it is its mechanical movement company, ETA, which makes Swatch a real powerhouse. According to U.S. watch magazine Watch Time, the Swatch Group-owned subsidiary is by far the top supplier of watch movements to the entire Swiss watch industry. Recent rulings by the Swiss Competition Commission have put pressure on Swatch to loosen its grip on the watch movement business, including ending its current supplier agreements with Richemont's rivals. However, a deal with leading luxury Swiss watch group Richemont will likely help keep business ticking at a brisk pace.

Additional reporting by Susan Spies