Friday, January 25, 2008

A Price Fixing Scheme Is Not Forever for De Beers


De Beers, a diamond importer and mining conglomerate that controls 40 percent of the world's diamond trade, settled a class action lawsuit for $295 million, after being accused in several state and federal lawsuits of violating antitrust, unfair competition, and consumer-protection laws. Stories on the settlement earlier this week were reported by, e.g., the Chicago-Tribune and UPI.

The plaintiffs' complaints alleged that De Beers monopolized diamond supplies and conspired to control diamond prices. E.g., Sullivan v. DB Investments, Inc., No. 04-cv-02819 (D.N.J. June 14, 2004). De Beers continued to deny wrongdoing under the settlement agreement. Of the $295 million, direct purchasers are to receive $22.5 million, and indirect purchasers $272.5 million. Of the indirect purchaser amount, consumers are to receive approximately $135 million, and resellers approximately $137 million. De Beers also agreed to injunctive relief requiring it to "comply with and abide by the antitrust laws of the United States . . . , as well as with the antitrust laws of each of the several states."

De Beers marketing campaigns have been wildly successful in increasing the demand for diamonds, with advertising slogans such as "A Diamond Is Forever." De Beers has also succeeded in creating the impression that diamonds are much more rare than they actually are, in part based on their monopolization of supplies.

While at first glance $295 million seems like a healthy settlement amount, it is a tiny fraction of the estimated $294 billion total diamond sales during the 12-year class period, and antitrust laws provide for treble damages. If the plaintiffs were willing to settle for such a small percentage of sales, they must have had some serious concerns about their ability to successfully litigate the case.

Purchasers are required to submit their claims by May 19, 2008 in order to receive their share of the settlement. Claims forms and settlement documents are available at: https://diamondsclassaction.com/.

 

The Law Firm of Kotchen & Low LLP - Civil Litigation, Counseling, and Representation Before Government Agencies


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