EC Investigating Complaint Against De Beers

The European Commission has opened an investigation based on the complaint filed by IDH Diamonds and others against De Beers’ Supplier of Choice policy.

According to a report in Holland’s Financieel Dagblad one of the country’s leading financial dailies, a high-level official at the EC has confirmed that they have begun an investigation. Daniel Horowitz, Managing Director of IDH Diamonds, an Antwerp based rough diamond dealer has confirmed that they received a letter from the EC, “ I was asked by the Commission to supply a non-confidential version of my complaint against De Beers and we have done that.”

A non-confidential version of the complaint will allow the EC to communicate to De Beers the main issues that IDH has detailed in its submission. Whilst details of the complaint are not known, it would most likely be based on the following three arguments:

1)     If the DTC as a dominant supplier wants to brand all diamonds, it is restricting consumer choice, as non-branded goods will be hard to find, and probably drive up prices.

2)     The SoC Sightholder process allows the DTC to select Sightholders for subjective reasons as no one can check the validity of the process. A sightholder applicant that scored poorly does not know how to improve his standing if the weight of each category in the scorecard is not known and the relational standing is not clear.

3)     There is no proof that the SoC branding policy is working, and there is still a need to channel rough to non-branding outlets. However, at the same time there is puzzlement in the market over the supply to Diamdel at the expense of smaller dealers.

 “I am confident the EC will look into the matter with all the seriousness it deserves,” expressed Horowitz.

Responding to the news, a De Beers spokesperson commented to IDEX, “We are aware that IDH have raised a number of allegations in respect of the application of Supplier of Choice. The Diamond Trading Company does not accept the allegations made against it and will vigorously defend its position in respect of these allegations.  We do not, however, intend to comment on the specific details of the case or the merits of the allegations made against DTC.  As you know, the Commission issued a comfort letter in January 2003 approving the Supplier of Choice arrangements, following a lengthy and thorough dialogue and we have complied with our obligations to the Commission.”