Lawsuit settlement places new restrictions on De Beers’ behavior

If anyone wants proof that De Beers’ monopoly days are behind it, they should look at the recent settlement agreement for its consumer class-action lawsuit, which puts unprecedented restrictions on De Beers’ future behavior.
 
The settlement agreement, obtained by JCK, calls for De Beers to follow American anti-trust laws and to no longer get exclusive contracts from other producers–something it did regularly in its days when it sold diamonds through the CSO (Central Selling Organisation.)
 
In addition to agreeing to pay $250 million to a class of diamond producers (defined as someone living in the United States who purchased a diamond from January 1, 1994, to the date of the settlement), De Beers agreed to:
 
* “Comply and abide with the anti-trust laws of the United States.”
 
* Not enter into an agreement with a “third party producer” to be the exclusive purchasers of that producer’s rough diamonds, or set or fix that producer’s prices. Nothing in that agreement however, precludes De Beers from conducing business with Russian producer Alrosa, if the De Beers-Alrosa agreement is okayed by the European Commission and other regulators. De Beers can also enter into joint ventures.
 
* Not order any sightholder to “set or fix the resale price of rough diamonds,” “restrict the entities from which a sightholder can [purchase or sell] rough diamonds,”  or restrict the geographic region to which a sightholder may sell. This does not, however, preclude De Beers from selecting sightholders based on established criteria in a process approved by the European Commission (meaning “Supplier of Choice”).
 
De Beers acknowledges no wrongdoing in the settlement.
 
The settlement resolves all consumer class-action claims, but does not resolve two trade driven complaints, one from Anco Industrial Diamonds, and the other from British Diamond Import, from the head of the Miami diamond club. De Beers has defaulted in those actions.