Jun 30, 2010
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Top EU court backs deal to drop case vs De Beers

Jun 30, 2010

LUXEMBOURG, June 29 (Reuters) - Europe's top court backed on Tuesday an EU regulatory decision to drop an antitrust case against De Beers four years ago, saying the European Commission had not erred in accepting the diamond producer's commitments.

De Beers, the world's leading diamond producer, agreed in 2006 to phase out rough gem purchases from Russian state-owned diamond miner Alrosa over the next two years in an effort to ease concerns that the transactions could stifle competition.

The Commission, the 27-country European Union's antitrust watchdog, had launched legal proceedings against the two companies over their five-year agreement in 2002 under which Alrosa was to supply stones to De Beers.

"The court concludes that the Commission did not make an error of law or a manifest error of assessment or breach the principle of proportionality in adopting its decision," the EU's Court of Justice (ECJ) said.

It dismissed a 2007 ruling by the General Court, Europe's second-highest, that annulled the regulatory decision. The Commission had appealed to the ECJ against the lower court's ruling.

"The General Court infringed the discretion enjoyed by the Commission in connection with the acceptance of commitments," the ECJ said, backing a recommendation by a court adviser in September last year.

The Commission welcomed the verdict.

"It recognises the commitment procedure as an effective and distinct instrument providing a more rapid solution resolving competition problems," the EU executive said in a statement.

Antitrust lawyers said the ECJ ruling was a reminder of how much discretion the Commission had in accepting company pledges.

"It is very rare that the European courts interfere when the Commission ends a case using the Article 9 procedure," said Ian Forrester, partner at White & Case.

Under the Article 9 procedure, the Commission ends antitrust cases in return for legally binding commitments. It has applied this to cases involving Microsoft (MSFT.O), U.S. chipmaker Rambus (RMBS.O) and Germany's E.ON (EONGn.DE).

De Beers is 45-percent owned by mining group Anglo American (AAL.L). (Writing by Foo Yun Chee, editing by Dale Hudson)

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