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Law Suit Against Debeers


Edward Bristol
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In order -

 

A few people will get some money - mostly the lawyers.

 

At the time the accusations may have been valid.

 

Nothing. It just means that DeBeers can come in and sell at very high retail in the US.

 

Nope. Prices never fall without a serious crash of everything around them.. Not seeing that any time soon..

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Yes, I think the claims have merit. DeBeers denies them and the whole point of the settlement is to come to a resolution without an admission of guilt and without a trial. That’s what’s being ‘settled’.

 

I don’t see any affect on the industry. DeBeers market share continues to drop. Distribution channels continue to become more transparent. People who are inclined to think of the diamond business as an evil empire will continue to do so.

 

Prices have come down at retail recently, but not because of this. The distribution channels are getting much shorter as the Internet becomes more and more important both at retail and wholesale levels. Fewer people are involved and they are working for smaller margins. Meanwhile, at the manufacturing level, costs continue to rise as wages in producing countries go up along with things like fuel costs, equipment costs and taxes. For people who shop aggressively, the distribution channel from mine to finger is already pretty efficient and there’s not a lot more savings to be had here. The cost of rough continues to rise and I see no reason to expect this to change. DeBeers no longer controls the marketplace and hasn't for some time.

 

The settlement allows for $135 million (less attorney’s fees) to be paid to the class of all consumers. This is divided among all applicants who claim to live in the US and who claim to have purchased a diamond product between 1994 and 2006. Assuming people bother to fill out the form this is a HUGE class. Registration is free and easy. Payments of less than $10 each won’t be paid at all so if more than 13.5M people apply the majority will get nothing. This strikes me as fairly likely given the amount of publicity surrounding this whole program. Even in the most optimistic view the payouts will be in the $20 or less range. It’s still good fun to poke a stick at DeBeers and it’s easy enough to apply but the news has been badly misreporting this as a potential windfall for consumers.

 

Neil

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I agree with the observations of Neil & Steve.

 

 

 

IMO, The method and the volume of the hyperbole in this story and the way it hit the news networks smacked of professional press releases from the start.

 

In my understanding of the settlement, the administrators of this fund are in a peculiar spot, the more people that apply in the suit, the more money the administrators get to keep.

 

Fox's watching the chicken coop?

 

 

 

Brian

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About price..

 

I don't see it as a function of cost of goods dropping but rather more and more people cutting their profit margins to maintain cash flow.. Wholesalers are cutting their margins to try to sell more product to retailers who in turn are cutting their margins to try to sell more product..

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