Associations Aim to Stop Ban on Generic Diamond Ads

Two major U.S. jewelry associations have filed amicus (friend of the court) briefs asking a federal judge not to ban De Beers’ U.S. advertising after the company defaulted in an antitrust suit.

Jewelers of America and the Jewelers Vigilance Committee argued that any ad ban could have a devastating impact on the industry as a whole. JVC said it would “harm innocent jewelers and others in the jewelry business without any benefit to consumers.”

The case stems from a 2001 class-action lawsuit brought by a consumer, Andrew Leider, who claims he overpaid for a diamond because De Beers has a monopoly on diamonds. When the company, which has no legal presence in the United States, didn’t show up for court hearings, District Judge Harold Baer Jr. ordered a default judgment in favor of the plaintiff.

Among the remedies Leider’s lawyer seeks is a ban on De Beers’ generic U.S. advertising, such as its campaigns for right-hand rings and three-stone jewelry. The suit claims De Beers advertising is misleading because it falsely claims diamonds are “rare.” It even suggests that claims that diamonds equal love are false because the stones have been linked to conflict in Africa.

Industry lawyers think a ban on advertising is unlikely. However, just the prospect of De Beers’ ceasing its U.S. advertising was taken seriously enough to spur the multiple briefs.

“First Amendment jurisprudence unambiguously prevents courts from imposing a total ban on advertising even upon a convicted antitrust offender,” wrote JA’s attorneys. The brief also noted that equating diamonds with love is legally allowable because it’s “puffery” common in advertising.

A brief also was filed by J. Walter Thompson, De Beers’ U.S. ad agency. JWT did not reply to a query from JCK. Leider’s attorney, Christopher Lovell, also did not return a phone call from JCK.

Other recent De Beers legal actions:

  • There has been an unspecified holdup in De Beers’ attempt to settle its decade-old indictment for industrial diamond price fixing. In February, the Wall Street Journal reported that De Beers was in talks with the Justice Department to plead guilty to the charge at a court hearing in March. But the March court date was postponed, and another date has not yet been scheduled.

  • Press accounts have speculated that settling the charge would allow De Beers to do business in the United States, although this is not certain, since some of De Beers’ current practices may still run afoul of U.S. antitrust laws.

  • De Beers declined to comment, except to note that it wants to settle its legal problems in America.

  • The European Commission has sent subpoenas to sightholders looking for information on De Beers’ “Supplier of Choice” policy. The EC gave “Supplier of Choice” a green light in 2002—a move the company hailed as a great victory. After that, De Beers trimmed its sightholders list by nearly a third, spurring some of the outcasts to complain.

“We have received a number of complaints and are looking into them,” says EC spokeswoman Emilia Torres. “We closed the investigation last year but did say we would continue to monitor the market. We have not yet made a decision whether we will officially reopen the investigation.”