Japan concerned about BHP-Rio deal

TOKYO (Reuters) - Japan's Fair Trade Commission, worried about a BHP Billiton takeover of Rio Tinto, has begun talks with counterparts in Europe and Australia about a possible investigation, the Asahi newspaper reported on Saturday.

BHP, the world's biggest mining group, made public its plan on November 8 to take over third-ranking Rio and forge a mega-mining group with a market capitalization of around $350 billion.

Rio has so far spurned BHP's advances but a tie-up would assemble a massive controlling force across a range of commodities such as copper, aluminum, iron ore and coal.

Japan's Iron and Steel Federation, which represents companies such as Nippon Steel Corp and JFE Steel Corp, has said it vehemently opposes the proposed merger, arguing that it would be anti-competitive.

The Asahi newspaper said the Japanese watchdog was likely to talk with counterparts in South Korea and Taiwan, countries which also have steelmakers highly dependent on the miners.

Japanese fair trade officials were not immediately available for comment.

On Friday, Britain's Takeover Panel gave BHP a February 6 deadline to make an offer or walk away. The company said it was considering its options in light of the deadline but said no decision had been taken.

BHP has said the deal would create value for both sets of shareholders, generating $3.7 billion in synergy benefits after seven years, and has pledged to buy back $30 billion in shares if the deal goes through.

It has acknowledged that competition authorities would scrutinize a combination of the two firms, especially in iron ore, but has argued that a merger would help customers get more supply by accelerating the development of new mines.

(Reporting by Edwina Gibbs; Editing by Ramthan Hussain)