The Australian Competition and Consumer Commission today issued a Statement of Issues on the proposed joint venture of BHP Billiton and Rio Tinto to produce iron ore in Western Australia.
The Statement of Issues highlights changes in circumstances in iron ore markets since the ACCC reviewed the proposed BHP/Rio merger in 2008. These include the fact that the only significant purchaser of iron ore in Australia – BlueScope Steel – has publicly raised concerns about the proposed joint venture, and possible changes to the expansion plans of existing and potential competitors of the proposed joint venture entity.
Issues to be further examined in the next phase of inquiries include the likelihood that the proposed joint venture would have the ability and incentive to profitably withhold supply from iron ore markets, whether the proposed joint venture entity and Vale have an increased ability and incentive to coordinate their supply decisions, and whether competitors are likely to be in a position to constrain these effects. Vale is the world's largest producer of iron ore and would be the proposed JV's main competitor.
The ACCC invites further submissions from the market by 14 April 2010. The proposed date for announcement of the ACCC's findings remains as 28 April 2010.
Submissions can be sent by email to the ACCC at: mergers@accc.gov.au.
The Statement of Issues will be available on the public merger register on the ACCC's website, www.accc.gov.au/mergersregister.