Diamond advertising imperiled after De Beers defaults in antitrust suit

De Beers’ ability to advertise diamonds in the United States is in danger after the company defaulted in an antitrust suit brought by an irate consumer.

When the company, which has no legal presence in the United States, didn’t show up for June hearings on the matter, District Judge Harold Baer Jr. ordered a default judgment in favor of the plaintiff Andrew Leider.

The suit claimed that De Beers violated the Sherman Antitrust, Lanham and Wilson Tariff Acts by conspiring to keep diamond prices high and falsely claiming that diamonds are rare.

The action will now be referred to a magistrate judge who will determine damages.

The lawsuit requests that De Beers stop:

· “advertising diamonds in the United States”;

· “making agreements with United State citizens in unlawful restraint of trade”;

· “engaging in acts designed to artificially or unlawfully boost or increase diamond prices in the United States.”

Industry observers hope that the court will not grant the advertising ban, noting it’s one of the weakest parts of the suit. Some see the case as a “strike suit,” launched to win money and attorney’s fees. Both Leider’s lawyer and De Beers did not return a call from JCK for comment. De Beers’ U.S. advertising agency, J. Walter Thompson, declined comment.

Leider’s lawsuit seems to have grown out of an earlier lawsuit from a New York plaintiff, Sean Tietjan. Teitjan’s lawyer also did not return a call from JCK.