EC's De Beers Probe to Include Supplier of Choice Program

May 10, 2001

EC's De Beers Probe to Include Supplier of Choice Program

The European Commission is investigating De Beers' Supplier of Choice program in addition to its previously announced investigation into the De Beers/LVMH joint venture, The Financial Times reports. All Diamond Trading Co. sightholders received an "urgent and confidential" questionnaire from the EC about the new rough diamond sales policy.

With Supplier of Choice, De Beers has asked its sightholders to create marketing plans to move them closer to consumer markets. De Beers' purpose is to raise demand for diamonds through increased branding and advertising. Those sightholders who succeed will be rewarded with increased supply.

EC said its inquiry into Supplier of Choice could take six months, which could force De Beers to postpone implementation of the program, The Financial Times reports.

De Beers spokesman Andrew Lamont tells Reuters the investigation into Supplier of Choice is simply part of the EC's existing investigation into the joint venture with LVMH. He said De Beers had sent the EC details about Supplier of Choice as part of the LVMH investigation. "The EC, as part of their own due diligence in the process, have to then send out questionnaires to ask sightholders what they feel," he says.

A diamond source in Antwerp tells The Financial Times the questionnaire asked about diamond trading in general, De Beers, brokers and Supplier of Choice.

- by Peggy Jo Donahue