Belgian Diamond Association Files SoC Complaint

The Belgian Association of Dealers, Importers, Exporters of Polished Diamonds (BVGD) filed an official complaint on Thursday with the European Commission’s Competition Authority against De Beers for its Supplier of Choice program (SoC), requesting that it be declared illegal.

The Commission has investigated SoC, finding it an infringement of articles 81 and 82 of European Competition law. In January 2003, the Commission issued a Comfort Letter after accepting changes to SoC offered by the DTC. The letter stated that the Commission would reopen the investigation if the availability of certain categories of diamonds were artificially limited or if there were not enough liquidity of diamonds on the market.

“BVGD believes that, in view of the now obvious abuses of SoC and the now visible goal that DTC/De Beers wants to achieve through its implementation, which is the restriction of competition and a total control of the diamond market downstream up to the consumer, the paltry measures proposed by De Beers were completely insufficient and ineffective to counterweigh the numerous anticompetitive effects that the Supplier of Choice Program causes,” the Association said Friday.

It goes on to say that “De Beers has misled the European Commission, has abused its dominant position and has artificially limited the availability of diamonds on the market,” adding that its traders allocation criteria is “obscure”, and bars access to adequate quantities of diamonds.

Because of SoC and obligations imposed by De Beers on Sightholders, BVGD is asking the European Commission to reopen the case. It is asking the Commission to declare SoC illegal and end it.

The association also wants to end the practice of giving incentives to polished diamond dealers to “switch supplies from non Sightholders to Sightholders”.

One odd declaration made by BVGD was a call to bar De Beers from “falsely advertising that non-DTC diamonds are of dubious origin.”

“The Commission must ensure that there always are sufficient supplies of diamonds to ensure liquidity on the secondary market. Accordingly, the final prices of the diamonds will reflect a situation of fair competition on the market.”

Separately, on June 28, the BVGD submitted comments to the European Commission concerning the De Beers/Alrosa Agreement, saying it also has “a very negative effect on the availability of diamonds.”

De Beers was not immediately available to comment.