Scribd Logo
Upload

Welcome to Scribd!

  • 442 views

    De Beers and The US Antitrust Law

    Uploaded by

    आशिमा Dhull
    De Beers formed a monopoly on diamond mining and distribution in the late 1800s by buying up other mining claims. They strategically limited supply to keep prices high and created an illusion of scarcity. However, US antitrust law opposed monopolies, so De Beers had to sell diamonds indirectly through London to US customers. In the late 20th century, new mines in Russia and Angola threatened De Beers' monopoly. Share prices fell during an Asian financial crisis as new shareholders prioritized short-term profits over stability. To adapt, De Beers proposed exploring new markets, using stockpiles for new products, and improving their brand image and accounting practices.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd

    De Beers and The US Antitrust Law

    Uploaded by

    आशिमा Dhull
    442 views13 pages
    De Beers formed a monopoly on diamond mining and distribution in the late 1800s by buying up other mining claims. They strategically limited supply to keep prices high and created an illusion of scarcity. However, US antitrust law opposed monopolies, so De Beers had to sell diamonds indirectly through London to US customers. In the late 20th century, new mines in Russia and Angola threatened De Beers' monopoly. Share prices fell during an Asian financial crisis as new shareholders prioritized short-term profits over stability. To adapt, De Beers proposed exploring new markets, using stockpiles for new products, and improving their brand image and accounting practices.

    Original Description:

    case study

    Original Title

    De Beers and the US Antitrust Law

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    De Beers formed a monopoly on diamond mining and distribution in the late 1800s by buying up other mining claims. They strategically limited supply to keep prices high and created an illusion of scarcity. However, US antitrust law opposed monopolies, so De Beers had to sell diamonds indirectly through London to US customers. In the late 20th century, new mines in Russia and Angola threatened De Beers' monopoly. Share prices fell during an Asian financial crisis as new shareholders prioritized short-term profits over stability. To adapt, De Beers proposed exploring new markets, using stockpiles for new products, and improving their brand image and accounting practices.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    442 views13 pages

    De Beers and The US Antitrust Law

    Uploaded by

    आशिमा Dhull
    De Beers formed a monopoly on diamond mining and distribution in the late 1800s by buying up other mining claims. They strategically limited supply to keep prices high and created an illusion of scarcity. However, US antitrust law opposed monopolies, so De Beers had to sell diamonds indirectly through London to US customers. In the late 20th century, new mines in Russia and Angola threatened De Beers' monopoly. Share prices fell during an Asian financial crisis as new shareholders prioritized short-term profits over stability. To adapt, De Beers proposed exploring new markets, using stockpiles for new products, and improving their brand image and accounting practices.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    You are on page 1of 13

    De Beers and The US Antitrust Law -An analysis

    Submitted by: Group 9 Ashima Dhull[13PGPHR09] Mainak Sarkar[13PGPHR21] Priyank Arya [13PGPHR33] Shishir Shandilya[13PGPHR45] Tanmay Jain[13PGPHR57]

    The Beginning
    1866: Accidental discovery of diamonds by Cecil Rhodes 1880:Formation of De Beers mining company 1887:Expansion by buying all other claim holders and hence creating a monopoly 1890:

    Diamond Syndicate, aimed at buying diamonds specifically from Rhodes Sold them in specific quantities at set prices

    Challenges
    Long term profitability Flooding of European market resulting in price fluctuation The need for an indiscriminate buyer.

    Solution to challenges

    Keeping supplies low and prices high.


    It helped create an illusion of scarcity and hence allure customers

    Single producer(DBS Mines) and single distributor(Diamond syndicate)Monopoly. Formation of diamond cartel

    Changes introduced by Oppenheimer


    Realized the need for monopoly of distribution as well as of supply Kept the prices uniform

    -ve changes:
    New discoveries were made in Siberia and other parts of world. From 1960 to 1999, South African share in the world market dropped from 19% to 11%.

    +ve changes:
    Most diamond producing state agreed to sell diamonds solely to DBS. Accepted the rigid restrictions.

    Strategy at a glance
    Set up of the CSO at London as the central distribution point for world diamond trade They held diamond sales (sights) to elite group Stockpiling

    Buyers last resort Used own financial resources to stockpile excess diamonds during economic downturns

    US Antitrust Law
    Opposed monopoly in any form and promoted a competitive market Applicable regardless of the nationality of the party involved

    De Beers had to sell diamonds indirectly ensuring legal validity and anonymity via London to the US customers

    Challenges

    Russian and Angolans defected from De Beer and started selling on their own
    Counter-response: De Beer needed to increase their stockpile

    1997:
    Asian Crisis led to fall in prices and sales Share prices of De Beers fell

    New shareholders were interested in short term profitability rather than long term stability

    Strategic challenges
    De Beer always had to act on behalf of the whole diamond market instead of their own interests The accounting methods followed by them could not be understood by other enterprises Had a huge stockpile of diamonds

    Destroyed shareholder value

    Brand Equity
    Use of powerful slogans (A Diamond is Forever) and advertisements Premium jewelry had the De Beer logo on it Tried to propagate an image that they helped in the development of Africa

    Suggested Solutions
    Trying to legalize the sale of diamonds in US Try exploring new markets with the help of existing stockpile Introducing new products range using the stockpiled diamonds Improving brand image by showcasing the developments in South Africa, Namibia and Botswana Increasing advertisements and make De Beer the most coveted Diamond brand Adopt standardized accounting methods

    Thank You.

    You might also like