It is an unenviable corporate distinction to have agreed a deal that attracts extended attention from competition authorities across the globe. Such is the fate of the western Australian iron ore joint venture between Rio Tinto and BHP Billiton. This extensive scrutiny is justified: regulators should not let the deal go ahead as it stands.
The two companies make a clear business case for the joint venture. Their Pilbara operations duplicate so much infrastructure and staffing that claims for $10bn of savings in net present value look both plausible and deeply attractive.
Rio and BHP have worked hard to meet the concerns of regulators, who found the 2008 takeover plans hard to swallow before BHP walked away from its hostile approach. The 50-50 arrangement is intended to be a hands-off operation confined to production, leaving the companies free to compete on pricing and marketing.