DCWC Opposes De Beers-Russia Contract

In a strongly worded letter, the Diamond Club West Coast has asked the European Union not to approve De Beers’ new contract with Russia, warning it will have “anticompetitive” effects on the diamond industry.

The European Union has been looking at the legality of the De Beers-Russia pact, and it sent a confidential “Statement of Objections” to the two parties in March. At the recent diamond association meeting in South Africa, participants debated taking their issues with De Beers’ Supplier of Choice policy to the EU, but members ultimately decided against it. The DCWC has bucked the international organization and complained publicly anyway.

The letter, signed by DCWC president David Marcus, argues that the negative effects of Supplier of Choice will hurt not only small dealers but also small retailers.

“Small retailers … seem to be ignored in the Supplier of Choice program,” the letter says. “With the program’s emphasis on serving large chain operations and guaranteeing them supplies of diamonds, the potential anticompetitive effects on the small retailer and the dealers who historically have served them is of great concern.”

The letter concludes: “What the members of the DCWC seek is nothing more than the opportunity to compete on a level playing field. … Industry members locked out of the Supplier of Choice program, either because they themselves have been eliminated as sightholders or because their suppliers have been, must have other sources of rough and polished diamonds available in order to compete. To allow the DTC to purchase a significant portion of the Russian rough diamond supply would jeopardize their ability to obtain alternative sources of diamonds.”

The letter was copied to California Sens. Dianne Feinstein and Barbara Boxer, the U.S. Federal Trade Commission, and the U.S. Department of Justice.

Marcus has not received any response from the EU, but De Beers sent a reply denying the charges.