The overturning of the ruling preventing De Beers from selling to Alrosa brings to mind the role the European Commission, the legal arm of the European Union, has played in regulating this industry the last seven years. And it’s a singularly unimperssive one.
According to the now-official story, it was concerns that E.C. anti-trust authorities would start investigating De Beers that led De Beers to abandon its cartel model and develop Supplier of Choice. And when De Beers first submitted Supplier of Choice to the E.C., it was rejected.
What is galling is the grounds for the rejection. The E.C. felt SoC demanded too much of the DTC’s sightholders (an “unbalanced agreement,” a spokesman called it.) In the end, SoC was approved mostly as is, but with an Ombudsman added to referee disputes between the DTC and its clients. That’s fine for the sightholders, but they represent a fraction of this industry, and their ranks may grow a lot smaller in the future. What about the rest of this trade — the so-called “middle market,” which SoC brazenly tried to disenfranchise? The E.C. didn’t seem to care.
In fact, one could argue that the E.C. actually hurt the middle market. It insisted on “Chinese walls” (not-very-PC terminology, by the way) between Diamdel and the DTC, so they wouldn’t share information. The net result was, without the ability to scout the DTC sightholders of the future (its traditional role), Diamdel lost its reason for being. It is being “restructured,” and, many think, will soon be a shell of its former self.
I wish I could think of one meaningful thing the E.C. has done, but I can’t. The Ombudsman is in place, but at least one sightholder has accused De Beers of ignoring his edicts. Perhaps its most important ruling — forbidding De Beers from buying from Alrosa — has been overturned. And that may lead to a reconsideration of Supplier of Choice and the E.C.’s other rulings, at least according to Chaim. Further instability and restructuring is the last thing this industry needs.
Charles Wyndham has more choice words for the E.C. here.