EU competition authorities have launched an in-depth investigation of the planned merger of BP Amoco with Atlantic Richfield Co, better known as Arco.

Arco's headquarter - so close and yet so far for BP Amoco

The move comes immediately after the Commission published a long list of concerns regarding the planned merger of US oil giants Exxon and Mobil.

Both mergers are under review by US competition watchdogs as well, but people close to the investigation suggest that the Federal Trade Commission is less zealous than its regulatory counterpart in Europe.

The European Commission appears to be particularly worried that the mergers will create an oligopoly in the oil sector, where the market for crude oil exploration is dominated by just a few players.

During its four-month investigation, it will try to gauge the economic impact the link-ups will have.

In a statement explaining its investigation of the Exxon-Mobil deal, the commission said it would look into whether the merger "might result in a small cluster of oil companies capable of searching and dveloping unexplored reserves of the oil that will be consumed 10 to 15 years from now".

Competition fears

BP Amoco's acquisition of Atlantic Richfield is unlikely to make a big impact on competition in the European single market.

However, the commission is looking at the global implications of the trend to create larger and larger oil firms.

John Waterlow, an analyst with Edinburgh-based oil consultants Wood Mackenzie, said the EU probe appeared to indicate concerns that three big players - the merged Exxon/Mobil, BP Amoco plus Arco and Royal Dutch/Shell - could influence oil prices or could force smaller players out of oil exploration because of their financial might.