The European Commission announced Wednesday it opened an in-depth investigation into the joint retail venture between De Beers and LVMH Moet Hennessy Louis Vuitton to sell De Beers-branded diamond jewelry. EC says its initial one-month investigation identified concerns the joint venture might give De Beers increased power in the rough diamond market.
The commission now has four months to study the deal and will examine two main issues. According to the Dow Jones newswires, the commission will decide whether De Beers would be able to favor the joint venture for the supply of rough diamonds and if a De Beers retail brand will increase demand for upstream rough diamonds sourced from De Beers' supplies.
De Beers and LVMH remain committed to the deal and say they will continue to assist EC with the investigation. "Both parties remain fully committed to the implementation of the project, which they believe offers exciting opportunities for the development of a new retail operation that De Beers and LVMH believe will foster competition in the retail of diamond jewelry," the companies say in a statement.
- by Julia M. Duncan