De Beers and US Anti

Trust Law
CASE
STUDY

Abhishek Bhatnagar
Arti Jain
Sameer Jain
Siddharth Gupta
Varun Baxi

15P003
15P011
15P045
15P051
15P055

De Beers Tryst with US Anti

Trust Laws
Two Anti Trust
Laws

189
0 Sherm
an Act

191
4 Clayto
n Act

1945 President Roosevelt request Justice

department to investigate De Beers
1976 Department of Justice filed a Civil and criminal
suit against De Beers and two other associates for
grit
1994 Justice Department filed a suit against De Beer
and General Electric for price fixing in Industrial
Diamond Market

Challenges Faced
1977 Israeli Dealers hoarded their diamonds and
drove the prices up creating a speculative bubble
1981 Zaire struck a deal with independent Belgian
merchants for trading of small industrial grade
stones thus threatening to destabilize industry
1992 Russia and Angola began leaking diamonds in
world market causing De Beer to load more
diamonds in its stockpile to maintain prices.
1997 Asian Crises saw a significant dip in diamond
sales bringing down the sales and the share prices.
1999 With more American investors investing in De
Beer, questions were raised on their business
strategy and accounting practices

Strategy For Future

Branding De Beers should try to establish itself as
a brand in the international market.
US Anti Trust Laws - De Beers must try to settle
down the impending issues with the US Justice
department regarding its business practices as US is
one of the largest markets
Change of Business Model - De Beers Rough
diamond stockpile has risen from less than $1 billion
in 1980 to roughly $4 billion in 1999. The business
model is not sustainable in long run now that De
Beer does not control the supply as it once did

SWOT Analysis
Strengths
1.High level of expertise in
Diamond Production
2. Extremely efficient team in
finding growth prospects
3. Strong Brand Name
4. Single channel marketing
beneficial
5.Extensive reach in various
Markets
6.Strong Market Control
-Complete regulation of
production line with marketing
and supply

Weakness
1. Accused of monopolistic
activities by the US justice
department- Growth prospects
in largest consumer market
hindered.
2. Destroyed shareholder value
with returns on capital below
weighted average cost of
capital.

Opportunity
1. Circumvent way through US
anti trust law to capture world
largest consumer market US(47%)
2. Use of Ingenuous Strategies
no tangible presence in US
,but using sightholders to
export diamonds indirectly to
the United States

Threats
1. Economic fluctuations
influence customer buying
trends
2. Government policies, taxes
affect the diamond market