Professional Jeweler Archive: EC Approves Supplier of Choice

March 2003

Diamonds/News


EC Approves Supplier of Choice

Sightholders will be required to develop marketing and branding plans; DTC will streamline sightholder selection and offer more choice in diamonds


The European Commission formally cleared the De Beers Diamond Trading Co.’s Supplier of Choice strategy on Jan. 16, following a 19-month review. Supplier of Choice, which DTC expects to be fully functional by the middle of this year, is the company’s plan to increase demand for diamond jewelry and make the diamond distribution system more efficient.

DTC will require its clients, also known as sightholders, to develop a more direct pipeline to distribute diamonds. DTC also will require clients to initiate marketing and branding ventures to increase the “noise” about diamonds in the consumer marketplace. Finally, all clients will be required to comply with a series of Best Practices Principles enunciated by De Beers, to spread ethical accountability and professional standards throughout the diamond industry. This last measure is meant to reassure consumers they can buy diamonds with confidence.

Give & Take

DTC is offering the clients who fulfill these criteria a chance to get a consistent supply of rough diamonds in the qualities and quantities they need, as well as DTC’s marketing advice and consumer-research information.

DTC introduced Supplier of Choice in 2000 to realign the company away from controlling supply to enhancing demand.

The EC initially objected to the plan, saying the criteria DTC planned to use in selecting its clients, as well as the amount of detailed confidential information and contractual commitments it required from them, could restrict the clients’ abilities to do business.

DTC agreed to streamline its selection process for clients and to give longer notice to those with whom it wishes to terminate contracts. Finally, clients will have to buy only the diamonds they’ve applied for and only after inspecting them. Before this agreement, the clients often were saddled with diamonds from DTC that didn’t suit their trading or manufacturing needs, but had to be accepted as part of the package.

Questions Remain

The EC apparently still has reservations about DTC’s control of the diamond market. EC issued a statement detailing concerns that DTC could use Supplier of Choice to artificially reduce the supply of diamonds, especially high-quality gems. This would drive up prices because DTC sells about 60%-65% of diamonds worldwide. But DTC and the EC agreed an ombudsman, who will be approved by the EC, will watch over the system to guard against abuses. The EC reserves the right to reopen its examination of Supplier of Choice if necessary.

– by Peggy Jo Donahue

U.S. Kimberley Authority Consolidated

DMIA and DDC programs dropped

At a meeting at the Diamond Dealers Club of New York on Jan. 8, held under the auspices of the World Diamond Council, leaders of the U.S. diamond industry unanimously agreed to create the U.S. Kimberley Process Authority. The USKPA will be the issuing authority for rough diamond export certificates as required by the international Kimberley Process Certification program.

Previously, the Diamond Manufacturers & Importers Association of America and the Diamond Dealers Club of New York each announced they would issue certificates (see Professional Jeweler, February 2003, p. 19) .

Members of the USKPA will be Judge S. Herman Klarsfeld, general counsel to the Diamond Dealers Club; Cecilia L. Gardner, executive director and general counsel of the Jewelers Vigilance Committee; and Matthew A. Runci (chair), president and CEO of Jewelers of America.

– PJD

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