Since the early 20th century De Beers Corporation has had a monopoly on the world’s diamond supply. This monopoly has essentially enabled them to set the price for diamonds as they made up the largest market share, thus at their peak they controlled up to 80% of the worlds rough diamond supply. Through their tactic of restricting the supply of diamonds, the De Beer Corporation has made diamonds, into a luxury good. Over the past 100 years they have consolidated their vast share of the market through essentially buying out all opposition they faced. Monopolies are illegal because they give a lot of power to an individual supplier giving them an unfair share of market power and price making ability. Usually monopolies power is attained through
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Diamond trading Co. is a system put into practice by the De Beers Corporation to give themselves complete control to distribute the majority of the world’s diamonds.
According to Paul Zimnisky “only buyers or “Sightholders” authorized by De Beers could participate in the non-negotiable DTC sales”. To keep a rising diamond price, De Beers had to stockpile their inventory in a weak market, or raise the prices charged to Sightholders, as a result De Beers would have the excess supply at hand to release its stockpile to the market when needed, repressing disorderly price increases.
The way that De Beers did business focused on the central idea of controlling the market supply. This way of conducting business is simply not feasible in a more competitive market structure, where there are more firms and less market power per firm. With the company restructuring its business plan, according to Paul Zimnisky at kitco.com “De Beers liquidated their stock pile from 2000 to 2004, resulting in a slight decline in diamond prices as the liquidation supply more than offset new demand coming out of Asia by 2005, the inventory overhang had been exhausted allowing market forces to drive diamond prices for the first time in a century, resulting in unprecedented price volatility”. Diamond prices around the world reached new highs in 2007, followed by a violent sell off in 2008 and 2009 before rebounding …show more content…
Working out the details took three years between Plaintiffs' Counsel and De Beers. On April 14, 2008, the Court conducted a fairness hearing and on May 27, 2008, granted final approval to the settlement.
The settlement provides $295 million to purchasers of diamonds and diamond jewelry, including $130 million to consumers. In addition, De Beers consented to a historic injunction that prohibits De Beers from monopolizing the world supply of rough diamonds and from fixing the price of polished diamonds. The injunction also requires De Beers to submit to the continuing jurisdiction of the United States District Court for enforcement of the injunction
On May 21, 2012, the U.S. Supreme Court denied the final petition for review. Pursuant to an Order of the Court, Initial Distribution checks were mailed to Authorized Reseller Claimants on August 31, 2012. The remaining proceeds of the Reseller Subclass Net Settlement Fund were distributed to Authorized Reseller Claimants on March 15, 2013. The claims administrator is conducting final claim audits, and distribution of settlement funds to other subclasses should take place within the next few
Diamond trading Co. is a system put into practice by the De Beers Corporation to give themselves complete control to distribute the majority of the world’s diamonds.
According to Paul Zimnisky “only buyers or “Sightholders” authorized by De Beers could participate in the non-negotiable DTC sales”. To keep a rising diamond price, De Beers had to stockpile their inventory in a weak market, or raise the prices charged to Sightholders, as a result De Beers would have the excess supply at hand to release its stockpile to the market when needed, repressing disorderly price increases.
The way that De Beers did business focused on the central idea of controlling the market supply. This way of conducting business is simply not feasible in a more competitive market structure, where there are more firms and less market power per firm. With the company restructuring its business plan, according to Paul Zimnisky at kitco.com “De Beers liquidated their stock pile from 2000 to 2004, resulting in a slight decline in diamond prices as the liquidation supply more than offset new demand coming out of Asia by 2005, the inventory overhang had been exhausted allowing market forces to drive diamond prices for the first time in a century, resulting in unprecedented price volatility”. Diamond prices around the world reached new highs in 2007, followed by a violent sell off in 2008 and 2009 before rebounding …show more content…
Working out the details took three years between Plaintiffs' Counsel and De Beers. On April 14, 2008, the Court conducted a fairness hearing and on May 27, 2008, granted final approval to the settlement.
The settlement provides $295 million to purchasers of diamonds and diamond jewelry, including $130 million to consumers. In addition, De Beers consented to a historic injunction that prohibits De Beers from monopolizing the world supply of rough diamonds and from fixing the price of polished diamonds. The injunction also requires De Beers to submit to the continuing jurisdiction of the United States District Court for enforcement of the injunction
On May 21, 2012, the U.S. Supreme Court denied the final petition for review. Pursuant to an Order of the Court, Initial Distribution checks were mailed to Authorized Reseller Claimants on August 31, 2012. The remaining proceeds of the Reseller Subclass Net Settlement Fund were distributed to Authorized Reseller Claimants on March 15, 2013. The claims administrator is conducting final claim audits, and distribution of settlement funds to other subclasses should take place within the next few