EU Restarts Competition Probe into BHP Takeover Bid for Rio

Sept. 29, 2008
International Iron and Steel Institute warns that deal would create a 'virtual monopoly' in iron ore mining

The European Commission on Sept. 29 restarted an in-depth probe into a hostile takeover bid by mining group BHP of rival Rio Tinto amid questions on whether the deal could hit competition amid rising commodity prices. Brussels launched the investigation in July but it was interrupted in late August due to delays by the companies in providing supplementary information which the EU executive had asked for.

Europe's top antitrust watchdog said it would rule by January 1, 2009 on whether to block the $147 billion takeover or allow BHP Billiton to go ahead with plans to forge an unrivalled global resources giant.

The Brussels-based International Iron and Steel Institute (IISI) has called on antitrust regulators to block a tie-up of the two companies, warning that such a deal would create a "virtual monopoly" in iron ore mining.

BHP has made an offer of 3.4 of its shares for every Rio Tinto share, valuing the takeover target at around $150 billion, which Rio has rejected as significantly undervaluing its company.

When the European Commission opened the in-depth probe in July it voiced "serious doubts" the deal could stifle competition. "In this very sensitive context any change making the situation worse could be extremely harmful," EU Competition Commissioner Neelie Kroes said then. "Therefore the commission will pay particular attention to ensure that this takeover does not adversely affect competition in Europe."

The Australian competition watchdog has also voiced concerns at the proposed merger, while U.S. authorities have already given their blessing to the proposed deal.

Copyright Agence France-Presse, 2008

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