Germany extends probe into BHP-Rio jv Jan Hromadko From: Dow Jones Newswires April 02, 2010 7:25AM
GERMANY'S Federal Cartel Office has extended the deadline of its investigation into the planned iron ore joint venture between miners BHP Billiton and Rio Tinto at the companies' request.
Such antitrust investigations in Germany are frequently extended on the request of the companies in question, which usually is an indication that they intend to submit more data to the regulator and in some cases make concessions to ensure they receive antitrust approval for their plans.
That the cartel office has launched an in-depth probe, however, is an indication the regulator has serious concerns about the joint venture's impact on competition.
"We've extended the deadline on request from the companies and expect that we will likely come to a decision (about the joint venture plan) toward the end of July," the spokeswoman told Dow Jones Newswires.
The deadline for the probe was May 25.
"We're carrying out a very comprehensive investigation," the spokeswoman said, but added the probe was "open-minded" and purely focused on competition issues of the joint-venture plan.
She declined to detail any issues the cartel office might be concerned about in regards to the two companies' plan.
BHP and Rio Tinto declined to comment to Dow Jones Newswires on the probe, though Rio Tinto said it would continue to co-operate fully with antitrust authorities.
Steelmakers around the world have repeatedly called on competition authorities, national and international governments to take action against the planned joint venture.
The World Steel Association's Director General, Ian Christmas, said the proposed joint venture was of great concern for steel producers.
ArcelorMittal, the world's largest steelmaker by volume, has also previously said the joint venture between Rio Tinto 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 seaborne iron ore trade in 2008.
The plan by BHP and Rio Tinto to form a joint venture of their iron ore operations in Western Australia state is facing antitrust hurdles across the world.
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 sea-borne iron ore.
The joint-venture plan -- which the two miners expect to generate more than $US10 billion ($10.9bn) in synergies -- comes as miners are negotiating iron ore contracts with steelmakers, pushing for a switch to quarterly supply deals from the existing annual benchmarking price system, and significant price increases.
