Judgments nº T-108/07 of The General Court, July 11, 2013

• Resolution Date: July 11, 2013
• Issuing Organization: The General Court
• Decision Number: T-108/07

(Competition – Agreements and abuse of a dominant position – Rough diamond market – ‘Supplier of Choice’ (SOC) system of distribution – Decision rejecting a complaint – No Community interest – Procedural rights of a complainant – Access to documents – Obligations in relation to the investigation of a complaint – Market foreclosure effects – Manifest error of assessment)

In Joined Cases T‑108/07 and T‑354/08,

Diamanthandel A. Spira BVBA, established in Antwerp (Belgium), represented by Y. van Gerven, F. Louis, A. Vallery and J. Bourgeois, lawyers,

applicant,

v

European Commission, represented initially by F. Castillo de la Torre, R. Sauer and J. Bourke, and subsequently by F. Castillo de la Torre and R. Sauer, acting as Agents, and, in Case T‑108/07, initially by S. Drakakakis, lawyer, and T. Soames, Solicitor, and subsequently by T. Soames and, in Case T‑354/08, by T. Soames,

defendant,

supported by

De Beers, established in Luxembourg (Luxembourg),

De Beers UK Ltd, formerly The Diamond Trading Co. Ltd, established in London (United Kingdom),

represented initially by W. Allan and S. Horwitz, Solicitors, and J. Ysewyn, lawyer, and subsequently by W. Allan, J. Ysewyn and N. Gràcia Malfeito, Solicitor, and lastly by N. Gràcia Malfeito, B. van de Walle de Ghelcke, J. Marchandise, lawyers, and P. Riedel, Solicitor,

interveners,

APPLICATIONS for the annulment of the Commission’s Decisions of 26 January 2007 (Case COMP/38.826/B-2 – Spira/De Beers/DTC Supplier of Choice) and of 5 June 2008 (Case COMP/38.826/E-2 – De Beers/DTC Supplier of Choice) rejecting the applicant’s complaint against the interveners alleging infringement of Articles 81 EC and 82 EC in the rough diamond market through their use of distribution agreements known as ‘Supplier of Choice’ (SOC) arrangements,

THE GENERAL COURT (Eighth Chamber),

composed of L. Truchot (Rapporteur), President, E. Martins Ribeiro and A. Popescu, Judges,

Registrar: N. Rosner, Administrator,

having regard to the written procedure and further to the hearing on 25 October 2012,

gives the following

Judgment

Background to the dispute

1. Case COMP/E-3/38.139 and the comfort letter of 16 January 2003

1 On 3 May 2001, with a view to obtaining negative clearance or, alternatively, for exemption under Article 81(3) EC, The Diamond Trading Co. Ltd (‘DTC’), part of the De Beers group of companies, notified to the Commission of the European Communities a set of standard agreements between itself and its customers who are known as sightholders; the purpose of those agreements was to establish a system for the supply of rough diamonds by DTC to its customers, the ‘Supplier of Choice’ (‘SOC’) system.

2 The objective of the Supplier of Choice agreements (‘SOC agreements’) is to drive growth in consumer demand for diamond jewellery, by encouraging long‑term growth at the retail level by the creation of a multi-brand environment and shorter distribution channels. In order to do this, through the SOC agreements, DTC intends to limit the number of sightholders selected, encourage them to work with downstream partners in order to improve the efficiency of diamond distribution and invest in retail branding.

3 The documents supplied in the context of the notification of the SOC agreements were as follows:

– a questionnaire sent to existing sightholders and applicants alike, ‘the Sightholder profile’, to solicit information on the basis of which they will be selected and evaluated;

– a document entitled ‘Sightholder criteria and other considerations’ setting out set pre-defined criteria which the sightholder must meet in order to be selected;

– a ‘Policy Statement’ setting forth the general principles applicable to the commercial relationship between the contracting parties;

– a code of conduct (‘Best Practice Principles’) to which sightholders must adhere, intended to ensure that consumers buying diamond jewellery are able to rely on professional and ethical standards;

– ‘conditions of sale’ which are incorporated into every contract.

4 On 25 July 2001, the Commission opened proceedings against DTC (Case COMP/E-3/38.139) and issued a statement of objections to it as regards the SOC agreements notified.

5 The Commission’s objections alleged infringement of Article 81 EC and Article 82 EC. In its view, the implementation of the SOC agreements would give the De Beers group the possibility of restricting the commercial behaviour of its customers. Those restrictions would result from the way the selection criteria are applied, the amount of detailed confidential information requested from sightholder applicants and the contractual commitments required from them, once they are selected. Furthermore, since those restrictions would be imposed by a dominant company, the implementation of the SOC agreements would also constitute an abuse of a dominant position.

6 On 8 October 2001, DTC replied to the statement of objections from the Commission. It stated that it was willing to explore any modifications to the SOC agreements that might address the Commission’s concerns whilst preserving the general features of the arrangements.

7 Several proposals to amend the SOC agreements were submitted to the Commission. The last version of the amended SOC agreements was forwarded to the Commission on 24 September 2002. The principal changes were as follows:

– the appointment of an Ombudsman (‘the Ombudsman’): this appointment is subject to the approval of the Commission; the Ombudsman is able to determine whether improper procedures have been followed by DTC in making selection or de-selection decisions and supply decisions that it proposes to make to sightholders over a six-month period; complaints as to the selection or evaluation of sightholders can be addressed to the Ombudsman, who may issue recommendations, which are binding on the parties and final, except if the matter is referred to arbitration or to litigation; DTC and the applicant have a right to refer the matters in dispute to the London Court of International Arbitration or to litigate in the courts, should they be unhappy with the Ombudsman’s recommendations;

– revised sightholder profile: the number of questions was reduced and some of the remaining questions have been reformulated; special confidentiality notices have been inserted in the questionnaire so that those filling it in are aware that business secrets will be treated as such;

– amendment of the documents entitled ‘Sightholder criteria and other considerations’ and ‘Policy statement’ and the conditions of sale.

8 By notice of 9 November 2002 (OJ 2002 C 273, p. 2, ‘the 2002 notice’), the Commission announced that it intended to adopt a favourable position with regard to the SOC agreements and gave interested third parties the opportunity of being heard, pursuant to Article 19(3) of Council Regulation No 17 of 6 February 1962, First regulation implementing Articles [81 EC] and [82 EC] (OJ 1962, English Special Edition, Series I, 1959-1962, p. 87).

9 On 16 January 2003, the Commission closed the procedure by means of a comfort letter, while reserving the right to reopen it ‘if the factual or legal situation changes as regards any essential aspect of the [SOC] agreements, which affects the view which was taken of them’. The Commission also stated that it ‘w[ould] pay attention to the fact that the implementation of the Supplier of Choice agreements does not result in De Beers artificially limiting the availability of certain categories of diamonds on the market or in selection/allocation criteria under Supplier of Choice not allowing traders to be provided with adequate quantities of diamonds in order to ensure enough liquidity in the market’.

2. The applicant’s complaint

10 The applicant, Diamanthandel A. Spira BVBA (‘Spira’ or ‘the applicant’), had been a sightholder for approximately 70 years. It is a pure dealer in rough diamonds selling to manufacturers and other dealers. Following the implementation of SOC in June 2003, De Beers informed it that it would no longer qualify as a sightholder and that supplies of rough diamonds to it would cease by the end of 2003. On the application of Spira, the tribunal de commerce d’Anvers (Antwerp Commercial Court) and, subsequently, the cour d’appel d’Anvers (Court of Appeal, Antwerp) (Belgium) ordered De Beers to continue supplying Spira with rough diamonds, on the basis of a prima facie case of abuse of a dominant position.

11 On 25 September 2003, Spira filed a complaint against De Beers and DTC, claiming that the SOC system implemented by them infringed Articles 81 EC and 82 EC. In the complaint, which is the basis for the present dispute, Spira requested the Commission to reopen the procedure concerning SOC. On the same date, Spira also filed a complaint against the Trade Agreement between De Beers and Alrosa of 17 December 2001 (‘the De Beers-Alrosa Agreement’), which in its view also infringed the above provisions. That agreement provided for De Beers, the largest rough diamond producer in the world, to purchase half of the production of Alrosa, the second largest rough diamond producer in the world, established in Russia, for a period of five years.

12 Following the complaint against SOC, in 2004 the Commission sent requests for information to the operators who were sightholders at the time, former sightholders who had been deselected in 2003 (‘the excluded sightholders’), brokers, rough diamond producers and diamond bourses.

13 The Commission received confidential replies from 54 sightholders, 13 excluded sightholders, 11 diamond bourses, five brokers and four rough producers. Non‑confidential summaries of those replies were made available to the applicant.

14 In 2005, Spira applied again to be selected as a sightholder. De Beers informed Spira that it had been selected as a sightholder, under the SOC system. However, Spira refused this selection.

15 On 27 February, 10 March and 27 March 2006, the applicant submitted additional...