The world's biggest miner, BHP Billiton, has formally filed for antitrust clearance from the European Commission for its hostile takeover bid for rival Rio Tinto, the company said.

The filing was made on Friday, and the commission said it would make a decision on the case by July 4.

The commission has the authority to block the merger or require BHP to sell certain assets if the takeover goes ahead.

BHP Billiton made a preconditional offer in February of 3,4 of its own shares for every Rio Tinto share, but must secure regulatory approvals for the deal in several jurisdictions before it can send out offer documents.

The offer, which Rio Tinto's board says undervalues the company and its prospects, also requires acceptance of shareholders owning more than of the publicly held shares in each of Rio Tinto limited and Rio Tinto plc.

BHP Billiton CEO Marius Kloppers said in February that he was confident that any regulatory or antitrust concerns could be resolved "without meaningfully impacting the benefits of the combination".

Kloppers has promised cost savings of $3,7-billion a year within seven years of completing the proposed acquisition, and is also proposing a $30-billion share buy-back within a year of completing the transaction, if its 3,4-for-one offer is successful.

IRON ORE

One of the tougher hurdles for BHP Billiton to secure competition approval for the deal is likely to be iron-ore.

Rio Tinto and BHP Billiton are the second and third largest producers of the steelmaking ingredient respectively, and the planned merger has drawn protests from steelmakers around the world, who argue that the merged entity would have too much control over setting prices.

The European Confederation of Iron and Steel Industries (Eurofer) on Friday urged the European Commission to block the deal, as the proposed merger would give the combined company a market share of almost 40% of the seaborne iron ore market.

Number-one producer, Brazil's Companhia Vale do Rio Doce holds about a 33% share of the market.

“We can not believe that the Commission will authorise the merger of two of three mining companies which dominate almost 75% of the world market for seaborne iron ore,” Eurofer director-general Gordan Moffat said.

“Such market dominance increases disproportionately the pricing power of companies concerned in iron ore and coking coal on top of the huge price increases seen over the last years.”

Every year, the big three iron-ore producers, Vale, Rio Tinto and BHP Billiton, conduct separate closed-door pricing negotiations with large steel producers in Europe, Japan, Korea and China.

Vale has already settled prices with steelmakers around the world, after securing increases of between 65% and 71% for its iron-ore.

However, Rio Tinto and BHP Billiton have said that they want a “freight premium” included in the price of their iron-ore, as they argue that it is significantly cheaper for Asian customers to ship material from their Australian mines, than from Vale's Brazilian operations.

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