The Australian Competition and Consumer Commission will announce its decision on the proposed USD 116 billion Pilbara iron ore production joint venture between BHP Billiton and Rio Tinto on July 22.

The ACCC's clearance is critical but the joint venture, announced in June last year, would still need clearance from European competition regulators and shareholders.

The proposed production joint venture is expected to create synergy benefits of more than USD 10 billion and requires BHP to pay Rio USD 5.8 billion to equalise the contribution of assets to the joint venture from a 45:55 basis to 50:50.

The lengthy ACCC investigation into the proposed merger has been considered grandstanding in some quarters, given the ACCC approved BHP's proposed takeover of all of Rio in 2008. BHP walked away from the takeover bid after the mid September 2008 onset of the global financial crisis.

The anti competition issues raised by the proposed production joint venture are of more concern to overseas consumers, with BlueScope the only local steel maker that consumes Pilbara iron ore.

BHP and Rio responded to early anti competition concerns with the proposal by altering it to separate marketing activities. The European steel industry, which gets most of its iron ore from Brazil, which is closer, has been particularly strong in its condemnation of the proposed joint venture.

An explanation for the ACCC's lengthy deliberation, other than grandstanding, is the upheaval caused by the now receding financial crisis and, more recently, the switch in the industry from the pricing of iron ore on the decades-old annual ''benchmark'' system to one based on three-monthly averages of spot prices.

(Sourced from The Age)