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RAPAPORT... The Belgium Polished Diamond Dealers Association (BVGD) is determined to win its fight against what it calls De Beers' "abusive and anticompetitive SOC" (supplier of choice) program.
The umbrella organization has filed an appeal with the European Court of First Instance in Luxembourg to overturn a recent European Commission (EC) decision not to uphold its complaint against De Beers.
"We want to show that the commission has not done its job," Andre Gumuchdjian, BVGD's president told Rapaport News.
De Beers announced January 31, 2007 that the Commission had rejected all outstanding complaints against its marketing arm, the Diamond Trading Company (DTC,) which runs the SOC program.
"[The Commission’s decision] demonstrates, once again, that supplier of choice has withstood scrutiny from one of the world’s most rigorous competition authorities and the recent complaints about supplier of choice are without merit,” Varda Shine, managing director of the DTC, said at the time.
In appealing the decision, BVGD said it believes the Commission had not been objective in reviewing its complaints and that its rights were not respected during the investigation.
"More seriously, the Commission disregarded the mountain of evidence they have received from the many market players and stakeholders," a recent BVGD letter to its members added.
The letter stressed that BVGD believes the objections will now be taken more seriously and that in a court of law the group would prove successful.
In its complaint, BVGD argued that De Beers has misled the Commission, by claiming to introduce a demand driven program designed to encourage its exclusive customers, or sightholders, to generate more sales by engaging more aggressively in marketing and going downstream by vertical integration.
"The truth is that [the sightholders] are not free to choose their own economic behavior and are coerced by De Beers to act against their own economic interest," the complaint read. "As an integral part of the system, De Beers has introduced an incredibly intrusive system of questionnaires and verification in order to control the behavior of its sightholders, and hence the industry."
BVGD protested to De Beers being allowed to set secret and subjective criteria and grading scales for evaluating a candidate and that it can accept or reject the candidate without revealing its score. In addition, BVGD warned that the program structure allows De Beers to steer and control the economic projects of its customers thus displaying monopolistic practices.
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