Gemstones in the News Today
A SECOND complaint of anticompetitive practice has been filed in the US against diamond group De Beers.

The case brought forward by Anco Industrial Diamond Corporation and America Diamond Tool & Gauge received approval from the District Court of New Jersey on September 22 to proceed with a class-action suit. It is understood that present and former Diamond Trading Company sight holders in New York are being subpoenaed to give evidence on alleged practices, which the accusers say resulted in price fixing.

The action, which involves rough diamonds, follows a class-action case related to synthetic diamonds, filed in October 2001 and settled out of court for $20m.De Beers spokesman Lynette Hori said in London that De Beers knew proceedings were afoot in the US, where it has been barred from operating since the early 1990s for alleged antitrust activities. She said the group was not in a position to discuss litigation.

An indictment issued in 1994 by the US district court for the southern district of Ohio, remains unnerved. Since then De Beers has had no legal presence in the US, by far the largest consumer market for diamonds, and its directors do not travel there. De Beers is under pressure to solve its antitrust problems in the US ahead of the planned opening of a flagship De Beers LV store in New York late next year. It says it is confident it will break into the US, which could lead to it trading in the US by the end of next year.

The European Commission advanced its investigation into complaints by several sight holders about De Beers’ supplier-of-choice policy, requesting De Beers to react in writing in the next few weeks to statements by complainants. If needed there can be bilateral meetings. A legal expert familiar with the situation in Brussel said: “Either they (the commission) will decide there is no reason for infringement and ask the complainants to withdraw their complaint, or reject them (the complaints). Or they will issue a statement of objections to which De Beers has the opportunity to reply."

He said formal hearings would take place only if there was some substance so that it could issue a statement of objections.

Such a statement of objections was issued against De Beers’ trade contract with Russian state diamond company Alrosa in January, warning about the European Commission’s preliminary view that the sales contract under which Alrosa is committed to sell half of its production through De Beers’ marketing arm in London is in breach of European Union competition rules.

While the commission gave De Beers and Alrosa the opportunity to develop their arguments and is still examining the case, reservations raised are likely to have a significant effect on the way De Beers structures its future agreements with the world’s second-largest producer. Obtaining wholesale gemstones is a great hobby that will last for years and years