Market NewsCommentWaiting rooms, Obituaries or a Monopoly?

Waiting rooms, Obituaries or a Monopoly?

By Charles Wyndham.   The other day I did my best to chop off my finger while tackling some particularly stubborn unwanted growth in the garden.   My stupidity required a trip to the local hospital to get it stitched up.   The inevitable wait proved interesting in that I have never seen so many obese people in one place.   However, it was not the excess of flesh that was odd, rather in the middle of the waiting room were two vending machines. One was selling all sorts of carbonated drinks, none of that wimp stuff like Coke Light it was all full of the real McCoy, what is it seven teaspoons of sugar per can, or is it nine?   The other was selling all assortments of crisps or other items guaranteed to get as much fat into you as quickly as possible for the minimum of money.   So, there I was in an NHS hospital watching loads of fat people loading up on sugar and more fat... odd.   The time in the waiting room allowed me to read the Saturday FT several times from cover to cover and one item I picked up on was in the obituaries.   The FT is not big into obituaries, I usually have to read The Times for that pleasure.   This obituary was headed, ‘The Scot who tackled Oppenheimer’s toughest global tasks’.   Gordon Waddell was an ex captain of the Scottish Rugby team and married Harry’s daughter Mary. Whilst the marriage did not last, that did not prevent Waddell being a key player in the Oppenheimer empire.   In the obituary, there is a quote from David Gleason, a former Anglo executive who said, “The single action (by Waddell) of converting Rustenburg Plats’s sales policy to market pricing (from producer-set prices) made the company hugely profitable.”   On this basis, the simple question to me is why the hell didn’t the same policy filter across the corridor to De Beers?   I am sure that all the same inane arguments were raised against Waddell doing what he did, but what was the bottom line?   In diamonds, we have got such a clear example of the power of market pricing in the success of the BHP sales model.   The woeful comparison with De Beers and its producer set pricing cannot be more painfully obvious for any but the blind and deaf.   On top of that we have recently been treated to the debacle of De Beers going out of its way to say that its subsidiary Diamdel will no longer sell at market prices, but will be forced not to sell below the DTC’s box price.   What has been portrayed by some as ‘market leadership’, is, I think instead, a rather pathetic example of a dog chasing its own tail.   On the one hand it is pretty odd to see the left arm of a company sell below the price that the right arm is selling at, but surely this says not very much for the right arm?   But why is it that everyone seems to get into a state of righteous indignation when it is only when Diamdel was selling below the DTC price and not nearly so pompous when it was selling at way, way above the DTC price?   Diamdel was there for price discovery, and boy oh boy did the DTC need the information.   Now we have the absurd situation that Diamdel is only allowed to report higher prices.   All this is in the context of De Beers’ market position.   I read with amusement the claim put out by some that De Beers’ market share is ‘only 35%’.   De Beers’ market share is well in excess of 40%, but even at 35% there is still a presumption of a monopoly.   ‘Presumption’ is a bit of an absurd concept in this context, given the interest that the European Competition authorities have taken in De Beers.   The reported comments by Monsieur Mellier, De Beers MD, raises all the ghosts of the past.   Here is a company whose ‘market leadership’ is to say we have dropped our prices and we are not going to lower them any more.... monopolistic or not?   Perhaps I should send Monsieur Mellier a copy of Gordon Waddell’s obituary, I would not recommend the waiting room at my local NHS hospital... but it may come to that

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