De Beers to Plead Guilty in the U.S. to Price-Fixing Charge From 1994
De Beers, the world’s top diamond producer, will plead guilty in an American court to a 10-year-old price-fixing charge, opening the way for it to resume business in the U.S. after nearly 60 years, a court official said Monday.
The return of the South African company is likely to spark a battle in the luxury goods market when De Beers opens a store on Manhattan’s Fifth Avenue this year to rival Tiffany & Co., Cartier and Van Cleef & Arpels, the latter two owned by Swiss luxury goods group Richemont.
Keith Mayton, a law clerk at the federal court for the Southern District of Ohio in Columbus, said De Beers would plead guilty to a single count of price fixing today in front of U.S. District Judge George Smith.
It will pay a fine of as much as $10 million related to the 1994 grand jury indictment, he said.
The company declined to comment.
De Beers, 45% owned by mining conglomerate Anglo American, was formed in 1888 by Cecil Rhodes, the legendary British colonial entrepreneur and Boer War figure.
Mayton said De Beers would plead guilty to violating Section 1 of the Sherman Act, which prohibits restraints on trade and fixing prices.
“The indictment alleges that in late 1991, early 1992, De Beers and GE entered into a conspiracy to fix prices of industrial diamonds,” the law clerk said. “This case deals with industrial diamonds only.”
The charges against General Electric Co. were dropped.
De Beers has had antitrust problems with the U.S. Justice Department since 1945. It has not been able to trade directly and currently uses intermediaries to sell diamonds into the United States, the world’s biggest diamond market.
Because of the dispute with U.S. antitrust authorities, De Beers board members faced arrest if they traveled to the United States. But the State Department is expected to lift the ban after today’s hearing.
Analysts said the ruling was not likely to have much immediate effect on sales. De Beers said last month that the global diamond market grew strongly in the first quarter.
