Regulatory clock ticking for Glencore-Xstrata – by Clara Ferreira-Marques and Foo Yun Chee (Toronto Star – February 25, 2012)

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Reuters News Agency

BRUSSELS—Commodities trader Glencore’s takeover of mining group Xstrata will face European Commission antitrust scrutiny, the companies said on Friday, kicking off a global regulatory process that could take months.

In a statement that follows a period of negotiation, the two firms involved in the proposed $90 billion (U.S.) combination said they had agreed to officially notify the commission about the deal.

That notification, once it has been acknowledged by the commission itself, leaves the regulator with 25 days to decide whether to approve, reject or begin an in-depth probe into the plan to create the world’s fourth-largest miner. It is just one of a series of antitrust hurdles the two companies will have to clear.

Some in the industry had expected Glencore and Xstrata to largely sidestep the EU antitrust process—and a possible probe—as Brussels has in the past considered the companies to be a single entity for the purposes of competition rules, given Glencore’s longstanding 34 per cent holding in Xstrata.

But lawyers and industry sources had cautioned it was unlikely the Commission would pass on the opportunity to lift the lid on the largest mining takeover deal to date. Even if that means apparently contradicting a ruling from as recently as 2006, when Xstrata bought miner Falconbridge.

“In Xstrata/Falconbridge the Commission said that Glencore already controlled Xstrata. So it’s surprising that now it accepts to review Glencore/Xstrata,” antitrust lawyer Ianis Girgenson at Covington & Burling said on Friday.

“I don’t think this has ever happened before. The Commission usually doesn’t want to contradict itself, though it can always find a way around the issue, for example by saying that conditions have changed since 2006.”

After talks with the companies, the Commission told the parties on Thursday that it required official notification of the merger, potentially implying it considers the two as separate companies and will therefore examine the deal, instead of leaving it to go to individual member states—a lengthier and potentially more complex process.

For the rest of this article, please go to the Toronto Star website: http://www.thestar.com/business/article/1136352–regulatory-clock-ticking-for-glencore-xstrata