EU opens investigation of Rio-BHP deal

By David Lawsky

BRUSSELS (Reuters) - The European Commission opened an in-depth investigation on Friday into BHP Billiton's (BHP.AX)(BLT.L) $170 billion (85.7 billion pound) unsolicited bid for rival miner Rio Tinto (RIO.L), with prices of iron ore already soaring.

The European Union's executive arm issued a tough statement with a list of sweeping concerns but said Australian BHP would be able to respond. The probe has a deadline of November 11.

The move came on the same day BHP matched Rio Tinto's prices with a near doubling of its own prices for iron ore lumps, mostly produced in Australia and many of them shipped to China.

"Concerns arise in particular as regards the markets for iron ore, coal, uranium and aluminium and mineral sands, because the proposed takeover could result in higher prices and reduced choice for these companies' customers," the Commission said.

Competition Commissioner Neelie Kroes said the firms produced basic commodities and competition in Europe must remain strong.

"The recent surge in commodity prices has had a serious impact on the industries buying these commodities, their customers, and ultimately all the consumers in Europe and elsewhere in the world," she said in a statement.

BHP would gain new power over iron ore and reinforce its leading position in metallurgical coal, the two main ingredients in steel.

The Commission said that would lead to "very high" levels of market concentration.