EU investigates LVMH-DeBeers venture

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European regulators are launching an in-depth investigation into the planned joint venture between diamond mining giant DeBeers and LVMH Group, to be named RapidWorld. The European Commission feared the venture would reinforce DeBeers position in the diamond market by bringing together the company which controls 60% of the market for uncut diamonds and one of the largest upstream jewellery retailers.

The investigation by the European Commission will have a time limit of four months before a decision must be made on whether the proposed transaction would damage or enhance competition. A DeBeers spokesman commented: "If we are to turn an industry which has had pedestrian growth rates in the past decade into a dynamic industry, then we need to stimulate competition. It will give diamond dealers another customer, so I don't know what is uncompetitive about that." De Beers argues that stiffer competition in the diamond jewellery market will lead to an increase in spending on promotion. This is likely to expand the current fragmented jewellery retail sector.