BRUSSELS (AP) -- European Union regulators said Monday they will investigate a plan by the world's No. 2 and No. 3 iron ore miners, Rio Tinto and BHP Billiton Ltd. to combine some operations because authorities suspect it could damage competition.
The European Commission said it would examine whether the companies' plan to pool iron ore mining in western Australia would affect the global prices or supply for iron ore transported by sea.
European steel makers complained last November that the mining combination could hike prices for iron ore, the key ingredient for the steel used to make cars, buildings and machinery.
The EU executive set no deadline for the probe into whether the deal breaks EU antitrust rules forbidding restrictive business practices.
EU regulators helped scupper BHP Billiton's hostile $68 billion bid for its Anglo-Australian rival Rio Tinto in 2008. BHP Billiton abandoned the takeover attempt after the EU's executive opposed it because they said it could harm competition. Rio Tinto said the deal undervalued it.
The two miners are now planning a joint production project to pool all their iron ore assets in Western Australia state, a move that could save them billions of dollars. Australia's BHP will also pay Rio Tinto $5.8 billion to equalize its contribution to the joint venture.
Europe's steel industry group Eurofer -- which represents ArcelorMittal SA, ThyssenKrupp AG and Corus Group -- claimed that the two companies would be able to share information on output that would affect industry negotiations to set benchmark prices and volumes.
They said the new mining deal would have the same impact on the iron ore market as a full merger between BHP Billiton and Rio Tinto.
The mining joint venture rescues Rio Tinto after it scrapped a $19.5 billion deal with China's Chinalco over Australian fears that the deal would give a foreign company a strategic stake in one of the country's biggest industries.
Rio's balance sheet is weighed down by billions of dollars' debt.
Combining BHP Billiton and Rio Tinto would have allowed them to overtake Vale SA of Brazil, the world's largest iron ore miner.
