The long-running battle, started in 2003, between Belgian rough diamond dealer Spira and diamond producer De Beers came to an end recently. Spira had sought to convince the Belgian Competition Authority (BCA) to intervene against De Beers’ Supplier of Choice (SOC) distribution system. The BCA, citing its enforcement priorities and the position at EU level, has now rejected Spira’s complaint and closed its investigation.
Spira’s complaint to the BCA arose out of De Beers’ introduction in 2003 of the SOC system, aimed at improving its previous rough diamonds supply arrangements. The European Commission approved the SOC for EU competition law purposes by way of a “comfort letter”. Spira, a distributor of some 60 years standing, was then dropped by De Beers on six months’ notice. Spira complained to the EC about this, claiming that despite the comfort letter De Beers’ decision and the SOC system infringed EU competition law.
The European Commission rejected the complaint, which decision Spira appealed to the EU General Court. In 2009, it then separately complained to the BCA. Spira claimed that De Beers was attempting to restrict the resale of rough diamonds and to control the downstream market using the SOC system, in breach of the Belgian equivalent of EU competition law. Pending the EU General Court judgment, the BCA agreed to interim measures requiring De Beers to continue to supply rough diamonds to Spira (which after various extensions was ultimately set aside by a Belgian court in March 2013).
In July 2013, the EU General Court upheld the European Commission’s decision, stating that there was no need for the European Commission to investigate De Beers due to the limited likelihood of finding an infringement of competition law. Following this judgment, the BCA reconsidered the case and in October 2014 the BCA formally dismissed Spira’s 2009 complaint.
Competition authorities across the EU coordinate their investigations and are keen not to take conflicting decisions. In addition, they of course have limited resources and have to set their enforcement priorities. In rejecting the complaint, the BCA referred to its enforcement priorities (which do not include the diamond sector in 2014) and to the finding of the EU General Court. Since the likelihood of the European Commission finding an infringement was too low to trigger an investigation by it, the position would be the same before the BCA.
Despite this ultimate failure by Spira in Belgium, the case does demonstrate that competition law can be used as a commercial “weapon” in the EU and that there are numerous avenues to enforce it. Notable in this context is that through seeking interim measures, Spira managed to extend its supply period from De Beers by several years, so achieving something of a commercial result.