The European Commission announced on January 25 that, according to Article 101 of the Treaty on the Functioning of the European Union (TFEU), it has opened an investigation regarding the impact on the common market by the proposed joint venture (JV) between mining companies
BHP Billiton and
Rio Tinto.
In line with an agreement signed on December 5, 2009 between the two companies, the proposed JV would combine the Western Australian assets of two of the world's largest
iron ore producers. The recent agreement focuses on the establishment of a JV for
iron ore production, leaving the marketing activities of the companies separate.
In 2008, the commission examined under the EU Merger Regulation the full acquisition of
Rio Tinto by
BHP Billiton. The transaction was abandoned by
BHP Billiton on November 26, 2008.
The commission will in particular examine the effects of the proposed JV on the worldwide market for
iron ore transported by sea. The opening of proceedings does not imply that the commission has conclusive evidence of an infringement but merely that the commission will investigate the case as a matter of priority. There is no binding deadline to complete inquiries into anticompetitive conduct.
"We very much welcome the decision of the commission," said Gordon Moffat, EUROFER director general. "We remain convinced that the JV would be an unacceptable concentration which will significantly restrict competition in the seaborne
iron ore market," he added.
Article 101 TFEU prohibits actions that may undermine trade between member states and competition within the EU internal market.