A U.S. federal appeals court has rejected the De Beers US$295 million antitrust deal between the diamond supplier and its direct and indirect diamond purchasers on what appears to be a technical issue.
The U.S. Circuit Court of Appeals for the Third Circuit has ruled that the settlement be set aside andáreturned to a lower court for further consideration since the District Court previously improperly certified a nationwide class of indirect purchasers.
The 2005 settlement agreement, reached by De Beers in an effort to end the price-fixing and monopoly charges against so it could enter the U.S. market directly, defined two types of claimants: direct purchasers and indirect purchasers of De Beers' diamonds. Both groups claimed they were harmed by De Beers' anti-trust behavior when they bought diamonds between 1994 and 2006.
As stipulated in the settlement agreement, of the total US$295 million in damages, US$22.5 million would be distributed to the Direct Purchaser Class, composed of those who acquired rough gem diamonds directly from De Beers, and US$272.5 million would be distributed to the Indirect Purchaser Class, composed of entities or individuals, such as consumers or jewelry retailers, that indirectly acquired either rough or polished diamonds from De Beers.
However, this week, in a 75-page ruling, Judge Kent A. Jordan accepted an appeal made by 34 of the indirect purchasers, which said that purchasers had claims under varying state laws and therefore could not automatically be qualified as a class. The appeal states that in May 2008, when U.S. District Court Judge Stanley R. Chesler granted final approval to the anti-trust settlement, Chesler had been too hasty to certify the class as a whole, ignoring the various state laws that precluded some members for pursuing an indirect purchaser claim, sources say.
The case has now been returned to a lower court, the U.S. District Court in New Jersey, for further consideration and to clarify which claims are subject to the treatment as a class.
For more on the claim, see the website established: https://diamondsclassaction.com/index.htm