Update on De Beers Class Action Suit

UPDATE/NOTE: Just a reminder, to find out how to fill your claim, go to diamondsclassaction.com.

I talked the other day with Joseph Tabacco, one of the lawyers behind the $300 million De Beers anti-trust settlement, and he gave me an interesting update on how the money is being distributed …

- The trade portion will likely total about $140 million, minus attorney fees (about 20 to 30%), and administrative costs.

- The "claim forms" will be mailed to most industry members within the next month or so. They will also be available on a new web site, diamondsclassaction.com (not operational as of press time), and on the JVC’s web site, along with guidance on how to fill them out. A claims administrator, Rust Consulting, will be available to answer questions (as will the JVC). Industry members will likely have six months to fill out the forms.

-  The forms will require trade members to list two years of diamond purchases in the period between January 1, 1994 and March 31, 2006. The two years don’t have to be consecutive. Obviously, you should show your two years with the highest purchases.

- Tabacco again said it’s “a waste” to use a service that fills out the forms for a fee, noting the forms should be “relatively simple.”

- The checks will likely be mailed out in late 2008.  

- How big the checks will be depends on how many people apply for them, but Tabacco says they "will likely be a small percentage of overall purchases." Big purchasers like Zale and other majors will likely receive the biggest checks.

- As far as what this means for De Beers entering the United States, Tabacco notes, “it removes a significant impediment for them,” but it’s not likely to happen until the suit is finally put to bed (in about late 2008.) I should note that De Beers executives have said, pretty consistently, that they have “no plans to change their business model” vis a vis the U.S.

I think it goes without saying that, as far as what the trade and consumers are "getting" from this lawsuit, it is pretty  insignificant. De Beers will agree to abide by American anti-trust laws, and they are enjoined from ever being a real monopoly again, but that was likely not in the cards anyway.   In the end the lawyers are the only ones really profiting (to the tune of about $20 to $30 million). It would be far better if the $300 million just went to charity and no one had to worry about collecting what will probably be relatively meager checks

By the way, while I am certainly not defending De Beers’ past business model, most industry members did pretty well when De Beers was a monopoly. It was when that stopped that a lot of the trouble began. The idea that the trade is owed money because of De Beers’ past conduct is kind of a joke. Perhaps, to make something positive come out of this, people in the trade can pool their checks together and start some kind of charitable fund.

In any case, if you’ve bought a diamond in the last decade or so, you are owed money, and you should collect it. We’ll keep you informed how to do that.