Post by azesm on Jul 14, 2004 9:36:47 GMT -5
From Abigail Rayner in New York
DE BEERS, the world’s biggest diamond producer, yielded to US law and was fined $10 million (£5.4 million) yesterday, opening the way for it to resume trading in the lucrative American market for the first time in 60 years.
De Beers pleaded guilty in the Federal District Court in Columbus, Ohio, to fixing the prices of industrial diamonds and was handed the maximum fine for a breach of anti-trust laws.
The fine brings to a close a 1994 grand jury indictment against De Beers in which it was charged with conspiring to fix prices with General Electric. The charges against GE have since been dropped. The case against De Beers could not be pursued without the company’s consent because it is based overseas. However, the protracted case severely limited its operations in the US.
De Beers has been kept out of the US market since 1945, after a series of antitrust cases. It has been forced to operate through intermediaries, who buy its diamonds rough outside the US and sell them polished inside the country.
The resolution of the court case should significantly increase market competition. De Beers LV, which sells De Beers-branded jewellery, now plans to open a retail store on New York's Fifth Avenue — home to Tiffany, Cartier, and Van Cleef & Arpels, the latter two owned by Richemont, the Swiss luxury goods group.
Analysts said that the US diamond market could easily support another contender.
De Beers LV is a separately managed company, formed in 2001 by a partnership between De Beers and LVMH.
De Beers, which has steadily been losing its footing in the market for rough diamonds, is seeking to expand into luxury goods and plans to open more retail outlets in cities around the world. De Beers LV has one jewellery store in London and three in Tokyo.
De Beers has been aggressively marketing its polished stones but it is essential to operate in the US — home to a booming $60 billion retail diamond market.
De Beers reported $5.5 billion full-year sales in February and earnings of $676 million. The company will report its half-year results next week.
The strong rand is expected to have weighed on its profits during that period, but most analysts were looking for an improvement on last year's performance.
Industry watchers will be anxious to learn how the joint venture is doing. The market for polished diamonds faces increasing competition from sophisticated synthetic copies.
Yesterday’s resolution of the court case is not expected to augment De Beer’s sales instantly, but the company is not expected to face difficulties trading in the US.
Its long absence from the US has done little to damage its brand recognition among the informed and wealthy clientele that De Beers attracts. A gradual expansion of stores in the US and into other markets is expected.
Nicky Oppenheimer, patriarch of the dynasty that controls the company, has said that the market for real diamonds is enjoying a comeback, after spending the ten years to 2000 losing out to rival luxury goods.
De Beers controls about two-thirds of the market in uncut diamonds. But the company, formerly a cartel that controlled 80 per cent of diamond supply around the world, has seen its power dwindle after competition from Australia and Canada.
business.timesonline.co.uk/article/0,,8209-1178732,00.html
DE BEERS, the world’s biggest diamond producer, yielded to US law and was fined $10 million (£5.4 million) yesterday, opening the way for it to resume trading in the lucrative American market for the first time in 60 years.
De Beers pleaded guilty in the Federal District Court in Columbus, Ohio, to fixing the prices of industrial diamonds and was handed the maximum fine for a breach of anti-trust laws.
The fine brings to a close a 1994 grand jury indictment against De Beers in which it was charged with conspiring to fix prices with General Electric. The charges against GE have since been dropped. The case against De Beers could not be pursued without the company’s consent because it is based overseas. However, the protracted case severely limited its operations in the US.
De Beers has been kept out of the US market since 1945, after a series of antitrust cases. It has been forced to operate through intermediaries, who buy its diamonds rough outside the US and sell them polished inside the country.
The resolution of the court case should significantly increase market competition. De Beers LV, which sells De Beers-branded jewellery, now plans to open a retail store on New York's Fifth Avenue — home to Tiffany, Cartier, and Van Cleef & Arpels, the latter two owned by Richemont, the Swiss luxury goods group.
Analysts said that the US diamond market could easily support another contender.
De Beers LV is a separately managed company, formed in 2001 by a partnership between De Beers and LVMH.
De Beers, which has steadily been losing its footing in the market for rough diamonds, is seeking to expand into luxury goods and plans to open more retail outlets in cities around the world. De Beers LV has one jewellery store in London and three in Tokyo.
De Beers has been aggressively marketing its polished stones but it is essential to operate in the US — home to a booming $60 billion retail diamond market.
De Beers reported $5.5 billion full-year sales in February and earnings of $676 million. The company will report its half-year results next week.
The strong rand is expected to have weighed on its profits during that period, but most analysts were looking for an improvement on last year's performance.
Industry watchers will be anxious to learn how the joint venture is doing. The market for polished diamonds faces increasing competition from sophisticated synthetic copies.
Yesterday’s resolution of the court case is not expected to augment De Beer’s sales instantly, but the company is not expected to face difficulties trading in the US.
Its long absence from the US has done little to damage its brand recognition among the informed and wealthy clientele that De Beers attracts. A gradual expansion of stores in the US and into other markets is expected.
Nicky Oppenheimer, patriarch of the dynasty that controls the company, has said that the market for real diamonds is enjoying a comeback, after spending the ten years to 2000 losing out to rival luxury goods.
De Beers controls about two-thirds of the market in uncut diamonds. But the company, formerly a cartel that controlled 80 per cent of diamond supply around the world, has seen its power dwindle after competition from Australia and Canada.
business.timesonline.co.uk/article/0,,8209-1178732,00.html
