Brussels, 01/02/2007 (Agence Europe) - The European Commission has closed an investigation into the rough diamond market, on the basis of increased transparency in De Beers' distribution arrangements, known as Supplier of Choice (SOC). At the Commission's request, De Beers, the world's largest rough diamond producer, has revised the mandate for the Supplier of Choice Ombudsman, who safeguards the objectivity of the SOC distribution system. The revised mandate of the Ombudsman will allow enhanced transparency in the selection of De Beers' customers ("sightholders") and in the allocation of diamonds, and will therefore enhance competition on the worldwide rough diamond market. This complements an earlier decision addressed to De Beers in 2006 to end rough diamond purchases from its principal competitor ALROSA by the end of 2008.
In a press statement, Diamond Trading Company (the commercial and marketing wing of the De Beers group) declared that it was, “delighted that, after further thorough and detailed examination of its sales and business practices…and having at all times cooperated fully with the Commission, it has concluded that further action on its part is not justified”.
The investigation was opened following complaints concerning these two aspects of De Beers' behaviour (the SOC system and the purchase of diamonds from ALROSA). Complaints were lodged by several parties in 2003, including the Association belge des importateurs et exportateurs de diamants taillés and Edelsteibörse Idar-Oberstein in Rhineland-Palatinate.
This investigation is now closed, given that the Commission considers that the changes introduced by De Beers in the meantime are sufficient. The obligation, however, to reduce the quantity of rough diamonds purchased from ALROSA remains legally binding due to the adoption of a formal decision by the Commission, based on Article 9 of Regulation 1/2003 implementing Article 82 of the Treaty (abuse of dominant position). In the event of this decision not being respected and without having to illustrate infringement to Community law having been committed (in the broadest sense of the word), the Commission explains that it could impose a fine of up to 10% of annual turnover.