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Germany investigates BHP Billiton-Rio Tinto iron ore joint venture.

Issued at 2010-02-27



Germany's Federal Cartel Office has launched a investigation into the planned iron ore joint venture between miners BHP Billiton and Rio Tinto, according to a posting on the regulator's website.

Other antitrust authorities including the European Commission -- the European Union's top antitrust authority -- are also investigating the planned joint venture. The European Commission opened an investigation into the proposed iron ore production joint venture on January 25 to see whether the proposal would hurt competition.

The commission has said it is concerned that the joint venture may have a harmful effect on price competition on the worldwide market for iron ore transported by sea. ArcelorMittal, the world's largest steelmaker by volume, said the joint venture between Rio and BHP could hurt its business.

Iron ore is a key ingredient used in steel making.
Rio Tinto and BHP Billiton are the second- and third-largest producers of iron ore in the world respectively, after Brazil's Vale. The three miners accounted for nearly 70 per cent of the world's sea-born iron ore trade in 2008.
The European Commission is reviewing the production joint venture under Article 101 of the treaty that governs the bloc. This means that regulators would look at the combination as a joint venture, rather than a merger, to determine if it restricts competition by, for example, creating a cartel.

Germany is allowed to launch a similar investigation under Article 101 since it allows member states to pursue antitrust investigations in tandem with the European Union. Germany is so far the only member-state that has publicly announced its intention to review the deal.

Spokespeople from both miners said they would co-operate fully with the Bundeskartellamt and all other relevant competition authorities in order to convince them of the benefits of the joint venture structure and why it will not raise competition concerns.

The German competition authority is likely to extend the review of the joint venture beyond the current May 25 decision deadline if the European Commission hasn't concluded its own investigation into the matter by then, the MLex news agency reports, citing a spokesperson for the Bundeskartellamt.

The two competition bodies are expected to carry their investigation in unison, the news agency said.
BHP and Rio Tinto aim to put the joint venture into effect in the second half of this year.


Source: The Australian Business



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