Russia has accused Arcelor, which chose L N Mittal as its prospective buyer, of discriminating against its business enterprises.
MOSCOW: The battle for acquisition of Arcelor SA assumed political connotations on Tuesday with Russia accusing the European steel giant, which chose India-born steel tycoon L N Mittal as its prospective buyer, of discriminating against its business enterprises.
"I am totally dissatisfied with this decision and consider it a bad sign," Russian Industry and Energy Minister Viktor Khristenko said, commenting on Arcelor's decision to dump Severstal.
The rejection smacks of "Russophobia," he said, while likening the episode with the political resistance in the UK to Gazprom's attempt to acquire British gas supplier Centrica PLC.
Russian Parliament Speaker Boris Gryzlov said: "The unprecedented propaganda campaign unleashed against the Severstal-Arcelor merger shows they just don't want to allow us onto international markets."
Earlier, President Valdimir Putin, addressing Moscow's ambassadors abroad, said that Russia was ready to interact and compete on the global arena, but would protect itself and its citizens from unfair competition.
Moscow's resentment comes even as the heads of the Mittal Steel and Severstal are to make separate appearances tomorrow before the French National Assembly's economic affairs committee.
AFP quoted a French parliamentary source as saying that the two will appear behind closed doors in connection with Mittal Steel's successful bid to form a partnership with Arcelor, a deal that was concluded Sunday and will now be put to Arcelor shareholders on June 30.
Severstal, with whom Arcelor had announced a merger in May to fend off what was then considered a hostile bid from Mittal, has said that it would present an improved offer to shareholders when they meet to vote on the Arcelor-Mittal deal.
But Arcelor is willing to discuss a new offer only if its made for the entire company.
It was unclear whether Severstal, run by oligarch Alexei Mordashov, would bid for 100 per cent stake in Arcelor, as the Russian company had previously agreed to swap only some steel assets for a stake in the Luxembourg-based company.
Alternatively, Mordashov could explore legal options if Arcelor advises its shareholders to vote against the earlier proposal for a merger with the Russian company which would amount to breach of contract, a source close to Severstal said.
Viktor Pleskachevsky, who chairs the state Duma's property committee, said "unfair competition was used" in the deal between the metal giants.
His comments came after Putin asserted that Moscow would protect itself and its citizens from unfair competition.
Pleskachevsky said: "It is clear that many Western politicians and businessmen benefit from holding back our companies from entering European and world markets...," but added that it was good to see Russian firms compete with those in West.
The Arcelor-Severstal merger was earlier hailed in Russia as a breakthrough, as it was the first time that a Russian company was to become a major shareholder in a global company.
But opposition from shareholders forced Arcelor to go with Mittal after resisting its bid for five months. The new entity, which would be christened Arcelor-Mittal, would be three times bigger than its nearest rival.
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