In a development that has jolted the diamond industry, the European Commission is apparently investigating De Beers’ ”Supplier of Choice” strategy.

Recently, the European Commission announced an investigation into whether De Beers’ proposed retail alliance with LVMH breaches anti-trust restrictions on the company’s behavior. But JCK has learned that sightholders recently received questionnaires from the European Union that contains queries about not only the LVMH merger but “Supplier of Choice,” and their overall relationship with De Beers.

Among the questions:

* Will ”Supplier of Choice” have an impact on diamond prices?

* Will ”Supplier of Choice” increase demand for DTC diamonds?

* How will the merger with LVMH affect your business?

* Will the merger with LVMH increase demand for DTC diamonds?

Sightholders described the questionnaire as detailed, with questions about how much rough sightholders buy, their annual business, and where they get their supplies. Some of the questions appeared modeled after De Beers’ recent inquires into their client’s business.

In the United States, sightholders said they were shocked by the questionnaire, and didn’t know whether they were legally required to answer it.

”We are not surprised,” says De Beers spokesman Andrew Lamont. ”This is a complex set of issues to get your mind around. We are more than happy to sit down and settle all the E.U.’s concerns.”

JCK