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Russian Diamond Contract and EC’s warning to De Beers and ALSORA

2003: Russian Diamond Contract and Deadline of Reply to the Companies

April 2003

The European Commission (EC) has extended the deadline for De Beers and ALROSA to reply to the Statement of Objections to De Beers’ Russian contract from March 17 to March 31, 2003.
In the Statement of Objections the EC warned De Beers and ALROSA that the trade agreement they signed in December 2001 might be in breach of EU competition rules. The agreement would have committed ALROSA to sell De Beers $4 billion worth of diamonds over a five-year period.

The EC’s main concern is that the agreement might restrict competition on the rough diamond market by eliminating competition from ALROSA believed that De Beers abused its dominant position by entering into the agreement in the first place.

Meanwhile, discussions between all parties continue. "They (the EC) ask a question, we give a reply. Information is going to-and-fro between the parties," explains Simon Gilbert, De Beers Corporate Affairs Manager.

An EC spokesperson says the extension is not unusual as there is no legal deadline for companies to reply to such an investigation. Once the parties reply, the EC antitrust authorities will need several weeks to examine their arguments. The Commission will also give the parties the opportunity to develop their arguments at an oral hearing, if requested.


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