JOHANNESBURG (Business Day) -- The world's biggest rough diamonds supplier, De Beers, will pay about R2.3 billion ($293.8 million) to traders and consumers in the U.S. to settle lawsuits alleging that the group fixed diamond prices between 1994 and 2005.
The company was accused of violating U.S. anti-trust laws by monopolising and fixing diamond prices.
The settlement comes after U.S. District Court Judge Stanley Chesler told lawyers on Monday at a hearing in Newark, New Jersey, that he would approve the settlement.
A De Beers official welcomed the statement. De Beers said earlier it would settle as " we believe resolving it will allow us to focus on building De Beers' future, maintain and grow our reputation as a leader in the luxury goods sector and, most importantly, protect consumers' confidence in their diamond purchases."
The settlement will bring an end to De Beers' legal woes with U.S. authorities that have dragged on for nearly 14 years and were threatening to tarnish its reputation in the world's biggest diamond consumer market.
This settlement follows a $10 million fine De Beers agreed to pay in 2004 after pleading guilty to fixing prices of industrial diamonds, which ended a 10-year fight with U.S. prosecutors.
De Beers is 45% owned by Anglo American [Nasdaq:AAUK; LSE:AAL; JSE:AGL], the family of De Beers chairman Nicky Oppenheimer holds 40% and the government of Botswana owns 15%. The Anglo (AGL) share price rose 2.2% to R531 at the close yesterday.
"De Beers is pleased that, at the conclusion of the hearing, Judge Chesler presiding indicated that a written decision approving the settlement would be forthcoming, and brought the proceedings to a close," company spokeswoman Lynette Gould said.
She said $272.5 million would be allocated to the indirect purchasers class and the remaining $22.5 million to the direct purchaser class. De Beers agreed to obey U.S. antitrust laws, and submit to U.S. court jurisdiction.
Indirect purchasers were resellers who bought diamonds wholesale and consumers who bought loose polished and diamond jewellery retail. Gould said direct purchasers were people, other than clients of the Diamond Trading Company, De Beers' sales arm, who "purport" to have bought rough and polished diamonds from De Beers.
The money was being held in trust subject to final court approval.
In court papers it was claimed De Beers "violated antitrust, unfair competition and consumer-protection laws by monopolising diamond supplies, conspiring to fix, raise, and control diamond prices, and disseminating false and misleading advertising."
De Beers denied the allegations and said it did nothing wrong.
Gould said De Beers chose to settle to preserve its reputation. It did not want the burden and distraction of litigation. The move was aimed at protecting consumers' confidence.
"Diamonds are too important to millions of people across Africa to leave this legal matter unresolved in the largest consumer market and risk consumers misunderstanding the true nature and value of diamonds."
The website https://diamondsclassaction.com gives terms of the agreement and details how consumers may submit claims.
