Belgian Dealers Bring Complaint Against Supplier of Choice

By Rob Bates, Senior Editor -- JCK Online, 8/1/2005 2:00:00 AM

Another trade group is legally challenging De Beers' Supplier of Choice policy.

André Gumuchdjian, president of the Belgian Polished Diamond Dealers Association (BVGD), says his group is filing an official complaint with the European Union seeking limits on De Beers. In an open letter, Gumuchdjian claims that representatives of De Beers' Diamond Trading Company in Spain offered the customer of a BVGD member significant advertising support if the customer agreed to buy only from sightholders. This, the letter says, would cut the member out of the equation.

"That is proof that [the DTC doesn't] want to protect the trade," Gumuchdjian told JCK. "They just want to steer people toward their sightholders. It's abuse of their dominant position. De Beers will never be like any other competitor because of their sheer size."

His letter further complains that the major Antwerp trade bodies like the Diamond High Council (HRD) cannot lodge complaints because of their domination by sightholders.

It also charges that a recent conference De Beers held with representatives of nongovernmental organizations on alluvial diamonds "brings into disrepute all sources of diamonds not under their control."

At press time, Gumuchdjian said he hadn't heard from the EU, but says most members have been supportive, except for one sightholder board member who resigned.

In response, De Beers spokeswoman Lynette Hori said the "DTC vigorously refutes the allegations expressed by the Belgian trade group with respect to Supplier of Choice. … The market for diamonds is extraordinarily competitive—more so than ever before.

"The entire diamond industry, including the DTC, is undergoing a period of real and difficult transformation," Hori continued. "Retail customers are demanding much more from their diamond suppliers and, in manufacturing, the low-cost production centers of India and China are putting increasing pressure on the traditional centers.

"The businesses that are succeeding are the ones that are most quickly and effectively adapting to these changing market conditions," she added. "To blame the DTC for what are effec-tively market forces at play does not make sense."

The European Commission, the EU's legal arm, issued a "comfort letter" with Supplier of Choice in 2003, but representatives have indicated they are continuing to watch the situation after trade complaints.

To view Gumuchdjian's letter, visit www.bvgd.be/user/en/newscontent.php?id=132.