Your great-uncle had a contract with De Beers’, which arranged for them to purchase your whole production and for them to market it. As soon as rough was mined, it would be sorted into hundreds of different qualities and sizes, each with his own price-level, at which De Beers’ would sell that quality. You received 85% of that total price.

By the end of the year, you have to decide whether to renew this contract. Your assistants quickly briefed you about the situation:

Lately, De Beers’ is selling too cheap to the market, in order to bring down their excess stock. If sold directly in Antwerp, you could make a lot more for your production.

Also, any new contract with De Beers’ will need to be monitored by the European anti-trust-authorities. It could well be that a simple renewal of the contract will be deemed anti-competitive and illegal.

On the other hand, your great-uncle has borrowed a considerable amount in the bonds-market, and in two years from now, this bond needs to be renewed. The contract with De Beers’ is a guarantee that such a renewal of the loan is not difficult. If however, you decide to start selling on your own, there is a risk that you cannot renew the loan.

Today, you had a first meeting with the representatives of De Beers’. It was quite pleasant. At the end, you realise that nobody is discussing anything essential, and that it feels more like a drink in your country club. Then, you just point out that you do not consider a renewal of the contract as something automatic, and that you clearly want to consider whether it is the best option for your company.

With a rather stiff upperlip, they react to your remark, saying that this needs to be checked carefully, of course. Later that day, you receive the news that a more senior delegation will come and meet you next month.

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