Contents - AL-Tax

5.1 Summary of Key Facts 732. The negotiation and execution of exclusive supply contracts with retailers,thereby ensuring a certain level of demand for cartel members’ rough stones.3. Support of retail jewelers’ efforts to differentiate themselves from competitors.Hence, trademarks and proprietary designs are not solely, or even primarily,a company-specific means of communicating the quality and uniqueness of itsproducts. They serve the broader purposes of certifying the specific origin andauthenticity of diamonds (an attribute associated with mines rather than distributors),attesting to the supplier’s adherence to a certain code of conduct, and, insome instances, ensuring a certain level of demand. Thus, for example, the WorldFederation of Diamond Bourses (WFDB), which represents non-sightholder roughdiamond dealers, has introduced a Federation-wide trademark that members arepermitted to display, provided they sign a document formally committing them toadhere to the World Federation Code of Principles. Similarly, BHP Billiton introducedthe Canadamark, described as “[a] disciplined, failsafe program of identificationand tracking ...to ensure the authenticity of [its] diamonds from the minethrough to the consumer.” 15De Beers’ branding initiatives—the first of many such initiatives in theindustry—were a cornerstone of its attempts to shore up its market power viademand-side measures. In response to critics’ increasingly forceful allegations thatthe sightholder system was anti-competitive, as well as the EC’s formal investigationsand findings, the DTC made certain changes to its single channel marketingmodel in 2000. Among other things, it began providing certain value-added servicesto sightholders and published a set of criteria that it would use in evaluatingprospective sightholders, including Financial strength and the ability to finance future growth; Market position; Distribution strategies and channels; Marketing strategies (the applicant’s capacity for value-added marketing andbranding); Manufacturing and technical excellence; Compliance with the “DTC Best Practice Principles.”Clearly, certain of these criteria—the market position and marketing strategies ofprospective sightholders—are intended to screen out applicants unable to differentiateand adequately promote the DTC’s stones. The DTC’s value-added services,consisting of both “core services” and “growth services,” are similarly designed,in part, to assist sightholders in generating demand, developing marketing plans,building brand recognition and gathering market intelligence. 16In addition to the provision of value-added services, De Beers also directly subsidizesits sightholders’ advertising and design development activities and invests15 See http://www.Canadamark.com (viewed December 24, 2005).16 Sightholders are obliged to pay a fee for these services equal to 2% of sales.