Diamond giant De Beers and Russian monopoly Alrosa have offered to scale back drastically a rough diamond distribution deal in response to EU concerns it harmed competition, the EU's executive said on Monday. Under the proposal, Russia's state-owned diamond monopoly Alrosa will slash the value of rough diamonds it sells to De Beers, the world's biggest diamond producer, from a maximum of $700 million in 2005 to $275 million by 2010.
De Beers, 45 percent owned by mining conglomerate Anglo American, says it sold $5.52 billion of rough and unpolished diamonds in 2003, and now accounts for about 50 percent of the world market.
The EU's executive Commission opened a probe after a five-year deal in 2002 between the companies, in which De Beers agreed to buy $800 million of rough diamonds a year from Alrosa.
The firms suspended the agreement but Alrosa, which sells about half of its rough diamonds outside Russia, continued to sell most of its international supply to De Beers.
"This is a way to allow Alrosa to become a viable competitor and develop its own international network," a Commission official said.
Alrosa extracts almost one-quarter of the world's diamonds.
The companies' commitments will be published in the EU's official journal and third parties will have a month to comment on the deal, the Commission said.
If it then decides the proposals are "robust", the Commission will formally adopt them, making the deal binding on the diamond firms. They could then be fined if they breach its terms.
By robust, the Commission said it meant that the agreement passes muster with customers.
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