In a 12- to 14-inch saute pan, heat 4 tablespoons oil to smoking. Add red onion, red and yellow peppers, thyme, sugar and red pepper flakes and cook over medium heat until peppers have softened, yet still retain shape and color, about 10 to 12 minutes. Remove from heat, season with salt and pepper and cool.
In a blender, place watercress, extra virgin olive oil, pine nuts and garlic and blend until smooth and bright green. Season with salt and pepper and set aside.
Season perch fillets with salt and pepper. In a 14-inch non-stick saute pan, heat 4 remaining tablespoons olive oil until smoking. Place seasoned fillets, skin side down, and gently shake pan so they do not stick. Cook 6 to 7 minutes over medium high heat until skin is crisp and fillets and cooked through. Flip fillets over, add peperonata to pan and bring to boil. Remove fish immediately to separate warm plates and divide warm pepper mixture over diagonally. Drizzle with watercress pesto and serve immediately.