Brussels probes BHP-Rio venture

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Europe's competition regulator is starting a formal probe into an iron ore venture between mining heavyweights Rio Tinto and BHP Billiton.

Rio, the world's second largest miner, and BHP, the number three, plan to share their vast ore assets in remote western Australia.

But Brussels fears the deal could give the companies a dominant position in the iron ore market.

The proposed joint venture is estimated to be worth $116bn (£72bn)

'High priority'

"The European Commission has opened a formal antitrust investigation... under the EU rules on restrictive business practices," said a statement today from Brussels.

Spokesman Jonathan Todd said the case would proceed "as a matter of high priority".

A spokesman for Rio said the Brussels' investigation was not unexpected given the size of the proposed joint venture.

"We will be working with the European Commission and aim to convince them of the benefits of the deal," he said.

A BHP spokesman said the EC's decision to investigate was "no surprise" and that the company still hoped to "close on the deal in the second half of this year."

Price fearsThe two companies thrashed out the joint venture following a hostile takeover bid for Rio by BHP, which was dropped in November 2008 amid global economic turmoil.

Before the new plans were drawn up, a $19.5bn bid for Rio by Chinese state-owned firm Chinalco collapsed when the two failed to agree terms.

China's booming steel industry, which is sucking in vast quantities of iron, opposes the joint venture, fearing it would push up prices.

Last summer Chinese authorities arrested four Rio Tinto employees in China and charged them with spying after negotiations over iron ore prices.

The World Steel Association and Eurofer, the European steelmakers' lobbying group, have both criticised the proposed joint venture.