Bloomberg, citing two people close to the case, reported that European Union regulators told lawyers for BHP Billiton Ltd that its USD 69 billion hostile bid for London based Rio Tinto Group may break antitrust rules.

As per report, the European Commission is likely to issue the companies a statement of objections, which will outline the commission's concerns that the combined company's share of the iron ore market may lead to price increases.

The report added that the commission's statement of objections, which is a confidential document, will be sent as late as the first week of November and BHP has the right to respond to the concerns and can ask for a hearing. Steelmakers, consumer groups and EU government representatives could attend the hearing and would have access to an edited version of the objections that has been stripped of confidential data.

The decision may pressure BHP to sell assets and prove to regulators by January 15th 2009 that the world's biggest mining merger would not restrain competition.

Mr Damien Hackett an analyst at Canaccord Adams Ltd in London told Bloomberg that “The EU is definitely the highest hurdle for BHP and the commission will seek to protect European steel mills. I think BHP will end up with a list of asset divestments that they will find unpalatable.''

The commission restarted its review on September 29 and will rule on the deal by January 15. The Australian Competition and Consumer Commission and the US Department of Justice have approved the deal without seeking asset sales, while a decision is still pending in South Africa.