(Adds government official comment, background)
TOKYO Oct 29 (Reuters) - Japan plans to ask the European Commission to oppose BHP Billiton's (BLT.L)(BHP.AX) bid to merge with rival Rio Tinto (RIO.AX)(RIO.L) on the grounds that a merger would adversely affect the domestic steel market, the Nikkei business daily reported on Wednesday.
Hiroyuki Ishige, vice minister for international affairs at the trade and industry ministry, will tell Philip Lowe, director general for competition at the commission, this week that Japan and the EU should jointly act to block the merger, the paper said.
A ministry official said there were no plans to make such a request.
The planned merger would have a big impact on Japanese, South Korean and Chinese steel mills, which depend more heavily on iron ore supplies from BHP and Rio than their European counterparts.
But only the antitrust watchdog in the EU, where BHP is headquartered and lists its shares, has the effective means to penalise BHP if it ignores orders to preserve competition in the deal.
Japan's competition regulators last month ordered BHP through the Japanese consulate in Australia to submit information on its bid for Rio, but BHP has refused to look at the request.
The EU commission has set a Jan. 15 deadline for making a final ruling on the $62 billion deal, which has already been cleared by Australian and U.S. competition regulators.
The merger would create a mining group controlling more than a third of the world's seaborne trade in iron ore, the main raw material for steelmaking. (Reporting by Yuko Inoue; Editing by Chris Gallagher)