European and Australian Regulators May Intervene in BHP’s Proposed Take-Over of Rio Tinto
BHP Billiton is seeking a hostile take-over of Rio Tinto. If successful, the merger will create the world’s largest mining conglomerate. However, European and Australian commissions suspect that the combined entity may wield undue monopolistic influence over the supply and price of iron ore on the world’s market and may violate anti-trust regulations.
Iron ore is a central component in the production of steel. BHP and Rio Tinto are the world’s second and third largest iron ore producers, and a combined entity would control an estimated 35% of the global iron ore supply.
The European Commission initiated a phase-one investigation in July. Based on initial findings that raised “serious doubts” about how the proposed merger may affect competition in the European market, the Commission has now moved on to a 90-day, phase II investigation. BHP asked for a twenty-day extension on the ruling, which is now due on December 9.
The European Commission’s ruling is believed to be the most likely to disrupt the bid, as European steel producers source a significant portion of their iron ore from holdings from regions under control of BHP and Rio.
The Australian Competition and Consumer Commission has issued a preliminary nine-page statement of issues that also raises anti-trust concerns. The ACCC is preparing a more detailed investigation about the potential effect of a merger between the two, which will be issued by October 1.
The ACCC said in a statement that “[t]o the extent the proposed acquisition lessens competition in the global seaborne supply of iron ore, it would be likely to have the effect of increasing global iron ore prices.” If the merger moves forward, there will still be alternative iron ore suppliers, but the ACCC is doubtful that they will have the capacity to supply enough ore to counteract the possible effect of a merged BHP-Rio Tinto conglomerate. Vale, a Brazilian corporation, is presently the world’s largest producer of iron ore.
Finally, China is concerned about how a BHP take-over of Rio Tinto will influences its domestic steel production, which helps fuel the country’s remarkable urban infrastructure development.
United States regulators have already given approval for the bid.
Market regulators have not expressed concern over other commodities the two firms share in common, such as coal, gold, copper, uranium, bauxite or alumina.
Rio Tinto has indicated that it believes BHP’s $175 Billion hostile take-over bid $142 does not properly value Rio’s holdings.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
Iron ore is a central component in the production of steel. BHP and Rio Tinto are the world’s second and third largest iron ore producers, and a combined entity would control an estimated 35% of the global iron ore supply.
The European Commission initiated a phase-one investigation in July. Based on initial findings that raised “serious doubts” about how the proposed merger may affect competition in the European market, the Commission has now moved on to a 90-day, phase II investigation. BHP asked for a twenty-day extension on the ruling, which is now due on December 9.
The European Commission’s ruling is believed to be the most likely to disrupt the bid, as European steel producers source a significant portion of their iron ore from holdings from regions under control of BHP and Rio.
The Australian Competition and Consumer Commission has issued a preliminary nine-page statement of issues that also raises anti-trust concerns. The ACCC is preparing a more detailed investigation about the potential effect of a merger between the two, which will be issued by October 1.
The ACCC said in a statement that “[t]o the extent the proposed acquisition lessens competition in the global seaborne supply of iron ore, it would be likely to have the effect of increasing global iron ore prices.” If the merger moves forward, there will still be alternative iron ore suppliers, but the ACCC is doubtful that they will have the capacity to supply enough ore to counteract the possible effect of a merged BHP-Rio Tinto conglomerate. Vale, a Brazilian corporation, is presently the world’s largest producer of iron ore.
Finally, China is concerned about how a BHP take-over of Rio Tinto will influences its domestic steel production, which helps fuel the country’s remarkable urban infrastructure development.
United States regulators have already given approval for the bid.
Market regulators have not expressed concern over other commodities the two firms share in common, such as coal, gold, copper, uranium, bauxite or alumina.
Rio Tinto has indicated that it believes BHP’s $175 Billion hostile take-over bid $142 does not properly value Rio’s holdings.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
Labels: eu competition law, eu law, european antitrust lawsuits
posted by European Antitrust Law at
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