27 November 2008 - Leading international law firm Mayer Brown advised EUROFER, the European Confederation of Iron and Steel Industries, before the European Commission in their opposition of BHP Billiton’s takeover bid for Rio Tinto. This was originally valued at $150 billion, and has now been withdrawn.
EUROFER which represents the European steel industry with members including ThyssenKrupp, ArcelorMittal, Corus, opposed the merger since the outset. The European steel industry is the world leader in its sector with a turnover of €140 billion and production of 200 million tons of steel per year.
The Mayer Brown team argued that the contemplated merger posed significant competition issues because in the iron ore sector, the merger would have resulted in only the merged entity and competitor Vale remaining. The merged entity would have pricing power in certain iron ore types which due to the global nature of the markets would also harm steel companies in Europe, and that the merged entity could have decreased the market supply and driven up prices. Similar arguments were also made for the coking coal markets.
Mayer Brown Partner Dr. Jens Peter Schmidt said: “This is another exemplary case for the enormous opportunity of third parties to influence the outcome of a merger control procedure. In the past months we made numerous substantial submissions to the European Commission. In my opinion, the arguments presented became the basis of the Commission's statement of objections in which it expressed it concerns about the potential merger.”
The Mayer Brown team was led by Jens Peter Schmidt, Partner in the firm’s Brussels office with partner Andres Font Galarza.
In the past Mayer Brown has often advised third parties in mergers, such as the Italian shipyard Fincantieri in the European merger control procedure concerning the takeover of Aker Yards through STX Corporation.
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