Forever: de Beers & Us Anti-Trust Laws Essay example

2642 Words Jul 15th, 2011 11 Pages
Forever: De Beers & US Anti-Trust Laws
Case Study Presentation

6/29/2011
Group 9 – The Explorers

Executive Summary

For centuries, diamonds have been regarded as one of the most valuable commodities in the world and the industry has evolved into billions of dollars. At the top, De Beers dominated the entire industry worldwide, from exploration to retail selling. However, it has a reputation of a monopolist, where it influences supply and demand. The two critical factors that De Beers carefully maintained throughout the century to remain in monopoly was to create the illusion of the scarcity of the diamonds and to keep the prices high. Realizing the benefits of the cooperation and the dangers of the oversupply, most
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Rhodes realised that the value of the diamond is not because of its beauty, hardness and other attributes but they have been treasured because they are rare. So in order to maintain the mass perceptions of value, Company creates the illusion of the scarcity of the diamonds by controlling the production and hence the supply of the diamonds. Realizing the benefits of the cooperation and the dangers of the oversupply, most diamond-producing states signed contracts with the De beers to form the cartel to regulate the diamond market and hence since then became the “Rulers of the Industry”.
Historically owned 85% share of the diamond market, is now facing challenges from new found mines in Africa, Russia and Australia. This clearly calls for a change in their business model and the need to venture into the US market. However, legally, De Beers is in violation of the U.S. antitrust laws and is therefore being prohibited from selling directly in the U.S. market. The problems have been identified and recommendations for the same have been made to help them move into the U.S. market and finally conclude with implementation steps for the solutions that have been recommended.

1Source: World Diamond Council
The De Beers Way of Doing Business
Majority of diamonds from mines were sold to De Beers. External buying offices would compete with purchasers buying from outside. De Beers sold them 10 times a year at

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