Amid the raging controversy over Mittal Steel's takeover bid for rival Arcelor, the European Union on Tuesday said it was against racial discrimination and the issue should be treated only on commercial considerations.

"The EU is of a clear view that nationality in such cases is not relevant and it should be decided according to the laws in place and commercial merits," European Commission director general (trade), David O'Sullivan said in New Delhi.

"It is unfortunate that allegations of racial discrimination have crept in the issue," he added.

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However, he made it clear the EU would be concerned if there were any violations of competition rules and the takeover created a monopoly kind of situation.

The Netherland-based Mittal Steel has made a $22.3 billion bid for Luxembourg-based Arcelor, which would create a steel company with an output three times bigger than its three nearest rivals combined.

The bid has sparked objections from the governments of France, Luxembourg and Spain and from labour unions, who are worried about job losses even though Mittal has assured that no worker would lose job and cited that his operations in other countries had not resulted in retrenchment.

The issue is also likely to figure during French President Jacques Chirac's visit to India early next month.