# CE2004078EN.01087701.xml

| 27.3.2004 | EN | Official Journal of the European Union | CE 78/877 |
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27.3.2004

EN

Official Journal of the European Union

CE 78/877

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(2004/C 78 E/0930)

WRITTEN QUESTION P-3926/03

by Jacqueline Foster (PPE-DE) to the Commission

(16 December 2003)

Subject:   Distortion of competition in the diamond industry

Subject:

In the Commission's current investigations into the compatibility with EC competition law of De Beers' Supplier of Choice distribution system and its proposed exclusive purchase agreement with Alrosa, what steps does the Commission intend to take to prevent De Beers from drastically reducing competition by effectively destroying the secondary market for the independent supply of rough diamonds to non-sightholders, in particular given that:

| — | the vast majority of desirable rough diamonds are sold by De Beers/DTC to strictly controlled sightholders for manufacture, |
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the vast majority of desirable rough diamonds are sold by De Beers/DTC to strictly controlled sightholders for manufacture,

| — | that former sightholders which were pure dealers and independent suppliers of rough diamonds to the secondary market have been eliminated under the Supplier of Choice selection procedure, and |
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that former sightholders which were pure dealers and independent suppliers of rough diamonds to the secondary market have been eliminated under the Supplier of Choice selection procedure, and

| — | that De Beers intends to take control of the distribution of rough diamonds to the secondary market through its subsidiary Diamdel? |
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that De Beers intends to take control of the distribution of rough diamonds to the secondary market through its subsidiary Diamdel?

Answer given by Mr Monti on behalf of the Commission

(20 January 2004)

(20 January 2004)

On 16 January 2003 the Commission announced that it had authorised the distribution system known as ‘De Beers's Supplier of Choice’ (SoC) following the changes that De Beers had made to the original system notified to the Commission and after conducting a detailed market survey to find out the views of actual and potential clients of De Beers regarding the modified system. On completion of the survey, the Commission published in November 2002 in the Official Journal of the European Union a notice summarising the content of the modified system and formally inviting interested parties to present their observations. Overall, the reactions of third parties were not negative.

When giving the go-ahead, the Commission undertook to monitor the market closely and reserved the right to reopen the file if any change in the factual and legal circumstances concerning a key aspect of the agreements led it to alter its position.

As indicated in its answer to Oral Question H-0637/03 by Mr R. Corbett (1), the Commission confirms that it intends to abide fully by its commitment. It is, therefore, continuing to monitor closely De Beers' implementation of the system in order to ascertain whether the Community competition rules are being complied with.

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A number of sightholders have lodged complaints with the Commission regarding the compatibility of the system with the Community competition rules. These complaints are being vetted in accordance with the Commission's normal procedures under Articles 81 and 82 of the EC Treaty.

The Commission cannot as yet indicate to the Honourable Member the measures it might take as it does not possess all the information needed to decide on the matter in full knowledge of the facts. In particular, it cannot yet say whether the three events referred to in the Honourable Member's question have actually taken place and, even if they have, it cannot give an assessment as to whether they are compatible with Articles 81 and 82.

It is only after examining the information obtained when vetting the complaints that the Commission will decide whether implementation of the system gives rise to competition problems.

At the same time, the Commission is pressing ahead with its examination of the agreement between Alrosa and De Beers with a view to verifying its compatibility with Articles 81 and 82.

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(1)  Oral answer of 18.11.2003.

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