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DeBeers Diamond Class Action Litigation

In 2001, the first in a flurry of lawsuits against diamond mogul DeBeers, of the Debeers Family of Companies of South Africa, were filed claiming that DeBeers unlawfully monopolized the supply of diamonds, conspired to fix, raise, and control diamond prices and used misleading advertising to sell its products.

The resulting fall-out from this initial lawsuit has led to a class action lawsuit and class action settlement in the United States on behalf of diamond merchants, primarily in New York and New Jersey. The class also extends to individuals who purchased diamonds bought from DeBeers or its subsidiaries between 1999 and 2006.

The bad news is that, unless you were a large diamond merchant held hostage by DeBeers during that time period, you are not likely to get a huge settlement based on the little rock you bought your fianceé. You are, however, entitled to apply as a member of the class.

Background of the Case
DeBeers is active in every aspect of the diamond industry, from exploration to diamond mining, diamond trading and industrial diamond manufacture. The company controls the industry for most of the world and has since the late 1800s. As a result, the company has the power to set prices as it sees fit. Based in South Africa, the company says it is not bound by the laws of the United States restricting the powers of companies to act as monopolies. Because the U.S. market is the largest single market for De-Beers, U.S. courts have said that U.S. laws do apply.

Although no specific lawsuits went to trial, DeBeers agreed to establish a multi-million settlement fund to be used to settle claims by individual diamond merchants and corporate entities in the United States. Individual diamond purchasers are also welcome to participate in the suit, although it is anticipated that for most, the cost of legal fees would outweigh any potential gain from participating.

There are many experts who watch the diamond industry who believe that DeBeers agreed to a class action settlement only in order to pave the way for a new venture in the United States – a chain of DeBeers Diamond Stores.

Time will tell whether or not the hundreds of millions set aside by the diamond giant to compensate harmed brokers will ever be distributed. The class action litigation against DeBeers is expected to go on for years.