ACCC begins review of BHP merger plan

June 6, 2008

June 6th (The Sydney Morning Herald) – The competition watchdog has commenced its review of the proposed acquisition of Rio Tinto by BHP Billiton.

Australian Competition and Consumer Commission (ACCC) has received a submission from BHP Billiton about its plan to buy its rival for about $US170 billion ($A178 billion).

The ACCC will assess the proposed merger and is inviting comment from other participants in the mining industry, customers and other interested parties.

“The ACCC will also be seeking talks with industry participants over the coming weeks,” it said.

Written submissions are required by July 1.

BHP Billiton chief executive Marius Kloppers said on Thursday he was confident the proposed takeover would be successful.

He said it would not present any no economic issues for steelmakers and customers.

BHP Billiton, the world’s largest mining company, last week kicked off the formal regulatory process for the bid when it filed its first paperwork with the European Commission, the European Union’s antitrust regulator.

BHP Billiton is offering 3.4 shares for every Rio Tinto share, valuing the deal at about $US170 billion ($A178 billion).

The European Commission has between 25 and 35 working days to approve the deal after receiving the paperwork, or begin a five-month period considering the takeover in more detail.

Steelmakers have expressed concern about reduced competition and stronger pricing control by a merged group.

It is widely believed that BHP Billiton may have to dispose some assets for the takeover to succeed, particularly iron ore assets.

However, Mr Kloppers said no “remedies” – in the form of divestments – were presented to European regulators to appease any potential competition concerns.

The company must also submit documents with regulators in South Africa and United States.

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