Top EU Court Rejects Appeal on De Beers-Alrosa Anti-Competition Ruling

The European Union's Court of Justice (ECJ) ruled on Tuesday that a decision by the European Commission to drop anti-trust proceedings against De Beers after the mining company agreed to stop buying rough diamonds from Alrosa was not “an error of law.” By that, Europe's highest court gave the final approval to the 4 year decision that changed the map of the global rough diamond sector.

After De Beers and Alrosa, the two largest diamond producers, signed a five-year, $4 billion, marketing agreement in 2002, the European Commission decided to investigate it.

At the end of 2004, the EU competition watchdog considered and later approved a proposal by De Beers and Alrosa to “phased down” De Beers’ diamond buying from Alrosa over a period of six years from $800 million a year to $400 million by 2008. Afterwards rough purchases between the two were planned to end.

In February 2006, the proposal was accepted and became legally binding. However later that year Alrosa appealed the decision and in July 2007, the European Union's Court of First Instance annulled the antitrust deal, saying regulators did not prove that the two firms formed a “dominant position” in the European market of the kind that would justify limiting their business.

The court added that the “Commission merely accepted the commitments proposed by De Beers at face value, without looking for alternative solutions which might have better respected the contractual freedom of the parties.”

The European Competition Commission appealed the overturn to the ECJ.

“The court concludes that the Commission did not make an error of law or a manifest error of assessment or breach the principle of proportionality in adopting its decision,” the ECJ said.