Report: De Beers Close to Deal with U.S.
By Rob Bates -- JCK-Jewelers Circular Keystone, 4/1/2004
De Beers is not commenting on a recent Wall Street Journal report that it is close to ending its long-running dispute with the U.S. Justice Department.
Spokeswoman Lynette Hori told JCK: "There is nothing more to say other than we are hopeful of a resolution with the Department of Justice. ... We cannot comment beyond that."
De Beers has not done business in the United States since World War II because of U.S. antitrust laws. In 1994, De Beers and General Electric were indicted on charges of industrial-diamond price fixing. De Beers never answered the charges, because it had no U.S. presence. The charges against General Electric were eventually dismissed, but more than a decade later the indictment against De Beers still stands.
Now, the WSJ reports, De Beers and the Justice Department are close to a deal in which De Beers will plead guilty to the antitrust charges and pay a huge fine.
The WSJ indicated that this may pave the way for De Beers to open an office in the United States, but the article only hinted at the larger question: Would the current structure of De Beers be acceptable to U.S. authorities?
Last year, the European Union's antitrust authority—considered one of the world's toughest—cleared De Beers' Supplier of Choice policy. De Beers executives hope that will mean the policy will get the go-ahead from U.S. authorities as well.
De Beers managing director Gary Ralfe said recently that he is "confident" De Beers will eventually be allowed into the United States.
There also is the question of De Beers' retail chain, which plans to open stores in New York and Los Angeles this year. De Beers executives have argued that the new chain—De Beers LV—is an independent entity and therefore would not be subject to the laws affecting De Beers. Still, settling the company's U.S. problems would make things much clearer in that arena as well.
