Brussels, 19/04/2001 (Agence Europe) - The European commission has decided to initiate an in-depth investigation into a planned joint-venture between De Beers and LVMH Moet Henessy Louis Vuitton in the diamond jewelry retail sale business. This operation, notified to the Commission on 9 March, was the outcome of an agreement concluded in January between, on the one hand, the South African diamond specialist De Beers (exploration, exploitation, recovery, evaluation and distribution) and the French firm LVMH, one of the leading distributors of luxury products in the world. The agreement provided for the creation of a joint-venture held equally, called Rapid World Limited and responsible for the marketing of cut diamonds. Its main activity will consist more specifically in the distribution of diamond jewelry in its own sales outlets, as well as through sites on the Internet. The plan also provides for the launch of the name De Beers as retailing brand for jewelry. The Commission's preliminary investigation led to fears that some elements of the agreement (joint-venture and De Beers brand) would reinforce the dominant position of the South African group on the upstream markets for the supply of rough diamonds and this in two ways. On the one hand, it is possible that De Beers should seek to play in favour of the joint-venture in the supply of rough diamonds. On the other, by launching its brand at retail level, De Beers should seek to create a demand for diamond jewelry of that make, which in turn would increase demand for rough diamonds provided upstream by De Beers. Given its initial conclusions, giving rise to distortions to competition. The Commission has decided to look further into the issue by initiating the second phase of the investigation of a maximum duration of four months.
De Beers and LVMH decide to create a joint venture
Having learnt of the Commission's decision not to give an immediate go-ahead to their planned joint-venture, De Beers and LVMH reacted immediately stating in a joint press release that they had "taken note" of the decision but that they remained "totally" decided to press ahead with their plan "which offers new opportunities for the development of a new distribution network" and which "would encourage competition".