EU antitrust inquiry threat to Pilbara merger

Matt Chambers; 27/1/09

BHP Billiton and Rio Tinto’s $US116 billion ($129bn) iron ore merger could face stronger headwinds, analysts say, after European Union regulators signalled they would focus on seaborne iron ore markets, rather than total global production. Late on Monday, EU competition watchdog the European Commission confirmed it had launched a long-awaited antitrust investigation into the pair’s plans to merge their iron ore operations in Western Australia’s Pilbara. “The commission will in particular examine the effects of the proposed joint venture on the worldwide market for iron ore transported by sea,” the EC said. The EC is seen as the biggest potential regulatory block to the deal, which BHP and Rio want finalised this year, although analysts say the jurisdiction of Chinese regulators is unclear. As announced by BHP and Rio last month, the merger will be reviewed by the EC only as a production joint venture, rather than as a full company merger.

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