Europe in antitrust probe of Rio-BHP iron-ore JV

Europe in antitrust probe of Rio-BHP iron-ore JV. A formal antitrust investigation into the proposed Rio Tinto-BHP Billiton iron-ore joint venture (JV) has been opened, the European Commission said. The commission said that Rio Tinto and BHP Billiton - the world's second- and third-largest iron-ore producers after Vale of Brazil - were being probed under the European Union's rules on restrictive business practices, given that the three miners collectively supplied most of the world's seaborne-traded iron-ore. BHP, headed by South African-born Marius Kloppers, and Rio, headed by American-born Tom Albanese, on December 5 proposed that the companies' entire iron-ore assets in Western Australia be combined. Examined by the commission in particular would be the proposed JV's impact on the global seaborne iron-ore market. The opening of proceedings did not imply that the commission had conclusive evidence of an infringement but merely that it would investigate the case as a matter of priority. The duration of the investigation would depend on factors that included the case's complexity, the degree to which Rio and BHP cooperated and the manner in which they exercised of their right of defence. It had to be borne in mind that the steel that would be made from the iron-ore was a key element of the automotive, construction and consumer-goods industries. Also, worldwide iron-ore consumption was currently picking up again in the wake of the global financial meltdown, and was forecast to grow steadily. The commission's current investigation, based on Article 101 of the Treaty on the Functioning of the European Union (EU), differed from the EU's 2008 probe of BHP's abandoned merger with Rio, in that the companies' marketing activities would, in this instance, remain separate. The commission said that it had chosen open proceedings, using Article 2(1) of Regulation No 773/2004 as its legal basis, a possible shock for both Rio and BHP, which had anticipated that Article 101 would be used for the review. Last year Rio and BHP estimated the JV's synergies to be worth $10-billion, stemming from the establishment of a single operation, shorter rail hauls, blending opportunities, combined procurement and greater capital efficiencies.