De Beers is a London and Johannesburg based diamond mining corporation. It has historically held a near total monopoly in the diamond trade. However, recently Israeli interests have captured 20% of the market. De Beers had been for many years under indictment in the United States for antitrust violations. On Wednesday 14th July 2004, De Beers pled guilty to the charges and paid a $10m fine. The plea enables De Beers to trade in the United States diamond market directly after years of acting through intermediaries. The US diamond market is the largest in the world with sales in the region of $500m per annum.
De Beers has used its monopoly to create an artificial scarcity of diamonds, thus keeping prices high. The modern tradition of diamonds as a part of engagement in many cultures has been largely created by De Beers through an amazingly effective advertising campaign started in 1939. The 'A Diamond Is Forever' campaign not only convinced the public that the only suitable gift for engagement is a diamond, but also served to limit the market in used diamonds.http://www.theatlantic.com/issues/82feb/8202diamond1.htm
De Beers distributes diamonds to favored customers (called sightholders) by selecting batches of diamonds themselves and offering them as is. Following the distressing use of diamond revenues by African revolutionaries engaged in diamond smuggling (blood diamonds), De Beers now sells only diamonds mined from their own mines, most of which are in South Africa and Botswana. They are currently involved in a joint venture which is developing a diamond prospect in Canada.
Retail joint venture
In 2001, De Beers launched a joint venture with luxury goods company LVMH in order to establish De Beers as a retail brand. The joint venture, called De Beers LV has a licence from De Beers SA to use the De Beers brand name in a retail environment. The venture has since opened two stores, one in London and a second in Tokyo. Following the settling of the United States anti-trust case, De Beers said that it planned to open a store in New York. Before the venture was allowed to begin, the EU competition commission launched an investigation into whether the venture would give De Beers too great a control over the rough diamond market. An initial one month probe determined that a longer investigation was necessary. The Commission eventually allowed the joint venture to go ahead in July 2001.
De Beers was founded in 1888 by Cecil Rhodes. In the 20th century the major shareholders became the Oppenheimer family. Sir Ernest, his son Harry Oppenheimer and his grandson Nicky Oppenheimer have been chairmen of the company.
U.S. court case links
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