BHP announced an all-share offer valuing Rio at about $193 billion last November, as mining boomed worldwide. BHP said the risk of taking on Rio’s much heavier debts, and the low prices it could expect from asset sales forced on it by regulators, were among the factors behind the decision to abandon the bid.

The decision could have far-reaching consequences for consolidation in the industry, writes Reuters’ John Kemp.

“For more than two decades, merger policy in the EU and around the world has become progressively more permissive, as regulators cited new theories of market “contestability” to permit accumulation of market shares that would have been blocked had they been proposed in the 1960s and 1970s.

But the BHP-Rio deal proved a step too far. The EU’s decision to insist on significant asset disposals is consistent with other signs that competition policy is toughening in the EU and around the globe,” Kemp says.

BHP’s backtracking also clearly illustrates how times have changed in a very short span as the credit crisis took hold and crippled global financial markets.