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 plaintiff Andrew Leider.

The suit claimed that De Beers violated the Sherman Antitrust Act, the Lanham Act, and the Wilson Tariff Act 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 States 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 are hopeful that the court will not grant the advertising ban, noting that it’s one of the weakest parts of the suit. Some see the case as a “strike suit,” launched merely to win money and attorney’s fees. Neither Leider’s lawyer nor De Beers returned calls from JCK, and De Beers’ U.S. advertising agency, J. Walter Thompson, declined to comment on the issue.

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