The European Competition Commissioner, Neelie Kroes, has waded into the increasingly acrimonious fight over the future of Arcelor, seeking to calm the nationalistic fervour that has greeted Mittal Steel's $23 billion (£13bn) unsolicited bid for the Luxembourg-based steel maker.

Ms Kroes made it clear that the EC would evaluate the deal on competition grounds only, in an apparent rebuke to the nationalistic tone being struck by some European politicians in the wake of last week's "hostile" approach by Mittal.

"I am not shocked by big, little or small mergers," she said, stating the bid would be examined "on competition grounds and on competition grounds only."

Yesterday, Mittal Steel said that it saw no significant competition issues arising from its bid, either in Europe or in America. The new company would have almost 350,000 employees at 61 plants in 27 countries - but analysts have said there are few areas of overlap that could cause obvious competition problems.

Lakshmi Mittal, Mittal Steel's billionaire founder and chief executive, has signalled his awareness of the political sensitivities surrounding the proposed deal. He said today that he had held "constructive" talks with Jean-Claude Juncker, the Luxembourg Prime Minister, whose government is the largest shareholder in Arcelor with a 5.6 per cent stake.

The talks came amid fears that Mittal's bid could lead to deep job cuts in Luxembourg, where Arcelor is the third-largest employer. Mr Mittal, who has already publicly ruled out job cuts, said: "We have agreed to continue discussions in the future ... We are going to honour all the commitments made by Arcelor."

Mr Mittal's comments came as Guy Dollé, the Arcelor chief executive, told the French press he would not rule out the possibility of an alliance "at the international level", designed to fend off Mittal's bid.

M Dollé made the remark in an interview with La Tribune, the French daily. Yesterday, M Dollé branded Mr Mittal "an able seducer who doe not always speak the truth," in Le Figaro.

A successful deal would represent the biggest merger seen in the steel sector and would create a company with output three times greater than its nearest rival. Mittal Steel, which was built by Mr Mittal, the Indian-born tycoon ranked by Forbes as the third-richest man in the world, is already the world’s largest producer by volume. It announced its surprise takeover bid for Arcelor on Friday.

Ms Kroes told members of the European parliament concerned about the possible impact on jobs that the offer would probably be referred to the commission, the EU’s executive arm and competition watchdog.

"It is likely that it will have to be notified and we will look at it very carefully as we do with all others," she said.

However, her comments are likely to do little to calm the French and Luxembourg governments, both of which have expressed deep concern about the implications for employment and investment.

Mr Mittal met in Paris yesterday with Thierry Breton, the French Finance Minister, in talks aimed at allaying fears his bid for Arcelor would lead to job cuts. Mr Mittal told a press conference that no cuts were planned.

M Dollé had earlier cautioned in a newspaper interview that the plan would have "dramatic consequences for shareholders and especially for workers".

The market has welcomed the prospect of a deal. Shares in both companies have risen since Mittal's surprise approach. One adviser told The Times: "The market loves this deal. How often do you launch an unsolicited bid and the stock price goes up?"

Despite ruling out job cuts, Mr Mittal said yesterday that a takeover would generate annual economies of scale of $1 billion (£565m), with 60 per cent of that sum being reached in the first year. The company’s finance director, Aditya Mittal, said that a merged group would hit annual net profits of $7.2 billion.

However, M Breton said after his meeting with Mr Mittal that there had emerged no sign that "that the cultures of the two groups could function and live together" and no "analysis to know if the group that could result from the operation would have compatible governance systems."

Mr Mittal is expected to meet with Belgian authorities and the Ms Kroes to discuss his plans for Arcelor, which was created in 2002 from a merger of French, Luxembourg, Belgian and Spanish steel companies.

After a meeting of Arcelor board members earlier in the week, the group issued a statement saying that management "unanimously rejects the unsolicited bid from Mittal Steel which it considers to be hostile".

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive