“De Beers pleaded guilty Tuesday to charges in a 10-year-old
price-fixing case under an agreement that would clear the way for
the diamond giant to resume selling diamonds directly in the
lucrative U.S. market.” Here’s the rest of the story:
What are the implications of this for the jewelry industry? Is this
a good development?
De Beers pleaded guilty Tuesday to charges in a 10-year-old
price-fixing case under an agreement that would clear the way
for the diamond giant to resume selling diamonds directly in
the lucrative U.S. market.
The company agreed to pay a $10 million fine after pleading
guilty to conspiring to fix prices in the $500 million
industrial diamond market.
De Beers has sold diamonds in the United States only through
intermediaries since shortly after World War II, when it was
first charged with price fixing.
The company was charged along with General Electric Co. in
1994. A judge later dismissed the charges against GE, saying
the government had failed to prove its case.
U.S. District Judge George Smith accepted the plea in the
case, in which the Department of Justice charged De Beers with
keeping prices in the worldwide industrial diamond market
The case was filed in Columbus because GE’s industrial diamond
business was headquartered in suburban Worthington. Industrial
diamonds are used to make cutting and polishing tools for a
variety of manufacturing and construction applications.
De Beers has no specific plans yet for the U.S. market, said
Lynette Hori, spokesman for De Beers in London.
“It doesn’t make a big difference in the way we do our
business,” she said before the hearing. “We operate a selling
system to our clients from London and Johannesburg, and we
have no plans to change that.”
De Beers had sales of $5.5 billion and earnings of $676
million in 2003. The company spends $180 million on
The United States represents half of the worldwide diamond
Prosecution of De Beers has been difficult because U.S.
officials have no jurisdiction over the company, which is
based in South Africa.
But the case also has hindered De Beers from doing business in
the United States, said antitrust lawyer John Majoras, a
partner with the law firm Jones Day in Washington.
Corporate officials trying to enter the United States run the
risk of being stopped by authorities, he said.
“That’s a pretty big market to give up and not be actively
involved in,” he said.
On the down side, Majoras said the deal could expose De Beers
to more lawsuits from plaintiffs who now think it is easier
and less costly to sue the company.