Diamond giant De Beers, which is 45% owned by global resources giant Anglo American, is to pay a $295-million class-action settlement after it was accused of fixing diamond prices and monopolising the United States diamond market.
While De Beers, the world’s largest supplier of rough diamonds, has agreed to pay the penalty, it has not acknowledged that it violated the law or did anything wrong.
According to the settlement website, the class-action lawsuits were brought against De Beers by individuals and businesses that purchased loose diamonds and jewellery or other product containing gem diamonds in the US.
“Beginning in 2001, plaintiffs in several states filed lawsuits against De Beers in state and federal courts alleging that De Beers unlawfully monopolised the supply of diamonds, conspired to fix, raise, and control diamond prices, and issued false and misleading advertising,” the website said.
The case involved diamonds purchased from January 1994 until March 2006, and the settlement agreement provides for consumers, resellers and direct purchasers to claim cash back.
Under the proposed settlement, a $295-million fund has been created by De Beers. This fund will be distributed to two groups, or classes, of purchasers: direct purchasers and indirect purchasers, with direct purchasers entitled to claim up to $22,5-million and indirect purchasers given access to the remaining $272,5-million in the fund.
A statement by the US’s Diamonds Claims Administrator said direct purchasers include individuals or businesses, other than De Beers’ Diamond Trading Company sightholders, that purchased any gem diamond directly from De Beers or one of its diamond mining competitors between September 1997 and March 2006.
It said indirect purchasers include consumers who purchased gem diamonds and diamond products for their own use or for a gift, as well as resellers –businesses that purchased gem diamonds and diamond products for resale between January 1994 and March 2006.
“This proposed settlement will provide a cash benefit to consumers who purchased diamonds or diamond jewellery, and broad injunctive relief addressing the conduct alleged in the complaints,” explained Josef Cooper of Cooper & Kirkham in San Francisco, California, co-counsel for the consumer subclass.
De Beers has also agreed to “refrain from engaging in certain conduct that violates federal and state antitrust laws,” the settlement website pointed out.
The deadline for US diamond buyers to file claims is May 19 this year.
“We are very pleased with the proposed settlement,” said Joe Tabacco of San Francisco’s Berman DeValerio Pease Tabacco Burt & Pucillo, co-counsel for the reseller subclass. “After a number of years, we were finally able to achieve a very substantial settlement of these lawsuits.”
The proposed settlement is currently pending in the US District Court for the District of New Jersey. The Diamonds Claims Administrator expects the court to hold an approval hearing on April 14, at which time the proposed settlement and the awarding of legal costs will be considered.
De Beers was unavailable for comment. — I-Net Bridge