The Russian government’s $4 billion plan to sell rough diamonds to industry leader De Beers Group could run into antitrust problems with the European Union, people close to the matter told The Wall Street Journal.
Russia has been selling most of its vast supplies of rough diamonds to De Beers for decades, but the arrangement has never before come under European regulatory scrutiny. The European Commission is investigating because of an increased spotlight on De Beers’s business practices, the Dow Jones business wire reports. As a result of the inquiry, the South African company may be forced to loosen its hold on Russian diamonds.
The commission’s antitrust department is concerned the Russian contract would continue to send most of Russia’s exports into the hands of De Beers, which could hurt competition in the world’s diamond trade and keep the prices higher than they otherwise would be, the people familiar with the inquiry said.
The commission’s investigation of the Russian contract is preliminary and no conclusions have been reached, Dow Jones reports. If the commission challenges the deal, De Beers and the Russian government probably will have to modify their contract. The inquiry is part of a broader antitrust investigation of De Beers, which dominates the world’s market for rough diamonds.