The De Beers Anti-Trust Settlement Loses Appeal

I just spoke to Joseph J. Tabacco, one of the plaintiff’s lawyers in the De Beers anti-trust case, about the recent court ruling that
didn’t grant “final approval” to the $295 million settlement.

As you will see below, it is not clear where this all going,
but essentially it means that everyone who has filed claims will have to wait a
few more months for their money to be distributed. (And, again, no one who has
filed a claim, especially consumers, should expect to receive a lot.)  

Other points:

– The appeals court ruled that, because some diamond consumers
weren’t able to file claims for technical reasons, the court could not give
final approval of the settlement and the lower court had to look at the
settlement again.  (The appeal was
filed by “professional objectors,” Tabacco says.) But the lower court may
decide there is no issue there, or the original attorneys (Tabacco and company)
may appeal the appeal. And there could be a settlement with the “professional
objectors,” which was likely their goal. 
As I said, things are up in the air.

– Contrary to what some have written, this doesn’t get De
Beers “off the hook.”
 The $295
million settlement between De Beers and the plaintiffs is still likely to stand,
Tabacco says.  

“The settlement is still a settlement,” Tabacco said. “I think all parties want
a resolution to this.”

However since everything is now being looked at again, “it’s
possible the settlement could be reconfigured higher or lower,” Tabacco says.

–  This may be
more detailed than most people want, but just to be clear: The objections involve
the settlement for “indirect” purchasers, which are consumers and the trade, as
opposed to the “direct” ones, which are dealers who bought rough from
producers other than De Beers (and who may be the only people, other than the
lawyers, who make a decent amount of money out of this.) But since the whole
settlement is tied together, the entire thing is impacted.

– Finally, Tabacco says: “We view this as a temporary set-back. I
remain optimistic the case will be settled on essentially the same terms.”

It’s also a set-back for De Beers. As hard as
it is for people to believe, the company actually wants to settle this case, because that would end its U.S.
anti-trust woes, and possibly pave the way for it to enter the U.S.  The money is in escrow currently and De Beers seems to have made peace with spending it. Spokeswoman Lynette Gould says: “We’re
aware of [the] opinion of the US Third Circuit Court of Appeals and are
considering its implications.”

If you are interested in more detail on this, the appeals
court decision can be read here (PDF).

JCK News Director