AGCM

At the end of two preliminary investigations, the Italian Competition Authority (“ICA”) deemed severely misleading and omissive the ways in which investment diamonds were offered by Intermarket Diamond Business – IDB S.p.A. (IDB) and Diamond Private Investment – DPI S.p.A. (DPI), including through the credit institutions with which they respectively operated, i.e., Unicredit and Banco BPM (for IDB); Intesa Sanpaolo and Banca Monte dei Paschi di Siena (for DPI).

The unfair practices observed in both companies concerned misleading and omissive information disseminated through their websites and the promotional material prepared by them on: a) the sale price of diamonds, presented as the market price, the result of an objective survey published in the main financial newspapers; b) the market trend of diamonds, purportedly in stable and constant growth; c) the easy marketability and resaleability of diamonds at the quoted prices with assured deadlines; and d) the qualification of the said companies as market leaders.
The investigation found that the market prices were the sales prices freely determined by the companies at a much greater amount than the purchase cost and international benchmarks (Rapaport and IDEX), the trend in market prices was the trend in the companies’ selling price annually and progressively increased by sellers and marketability and resaleability prospects were only linked to the possibility that each company would find other consumers within its own circuit.

The ICA also verified that the credit institutions, which are the main channel for the sale of diamonds for both companies, would propose investments to a specific tier of their customers interested in buying diamonds as a safe haven asset and diversify their investments by using the information material prepared by IDB and DPI.
According to the ICA, the fact that the investments were proposed by bank staff and the presence of bank staff at meetings between the two companies and customers provided broad credibility to the information found in the two companies’ promotional material, causing many consumers to purchase without further verification.

The ICA also ascertained IDB and DPI’s infringement of consumer contractual rights as regards the right of withdrawal and, for IDB, also of provisions on jurisdiction on disputes.

The sanctions imposed were as follows: in one case, totalling € 9.35 million (€ 2 million for IDB, € 4 million for Unicredit, € 3.35 million for Banco BPM); in the other case, totalling 6 million (1 million for DPI, 3 million for Banca Intesa, 2 million for MPS).

During the investigation, audits and inspections were carried out in collaboration with the Special Antitrust Unit of Guardia di Finanza and CONSOB provided information to help ascertain the unfair commercial practice.
The consumer protection associations Altroconsumo, which first reported the matter, Movimento Difesa del Cittadino and Codacons participated in the proceedings.

Rome, 30 October 2017