Brussels (AFP) - The European Commission on Friday opened an in-depth investigation into state-owned ChemChina's 40-billion-euro takeover of Swiss seeds giant Syngenta to see if it would hurt competition.
"We need to carefully assess whether the proposed merger would lead to higher prices or a reduced choice for farmers," EU Competition Commissioner Magrethe Vestager said in a statement.
The deal -- the biggest in a series of Chinese overseas acquisitions -- would combine Syngenta, a global leader in seeds and crop protection with ChemChina which controls Adama, the largest supplier of generic crop protection products in Europe.
"The transaction would take place in an industry that is already relatively concentrated," the Commission noted.
In a joint statement, ChemChina and Syngenta said they would "continue constructive discussions with the EU authorities in order to conclude the review as early as possible."
The Commission probe will run to March 15.
Syngenta said this week it was confident the deal would go through, having already been cleared in the United States and Japan.
The Commission said initial investigations showed the new company would have "relatively high combined market shares" in several categories, while ChemChina's Adama would be removed as a competitor with Syngenta.
Given the global scope of Syngenta and ChemChina, the Commission said it would cooperate closely with other competition authorities, notably in the United States, Brazil and Canada.
- Series of giant takeovers -
The deal is just one of several huge takeovers in the agro-chemical sector, with German giant Bayer offering $66 billion for US firm Monsanto, which in 2015 had tried to acquire Syngenta for $46 billion.
The Commission recalled that it also has an in-depth probe underway into a proposed tie-up between US chemical giants Dow and DuPont, valued at $130 billion, with a decision due February 6.
If the Commission, which oversees competition policy in the 28-nation EU, finds fault with a proposed merger, it can reject the deal but more usually it asks the companies to sell parts of the business, or to allow in newcomers so as to minimise the impact on customer choice and price.
Syngenta's deal with ChemChina -- also known as China National Chemical Corp -- has drawn intense scrutiny as Chinese firms have gone on a global shopping spree from Hollywood to European football clubs.
Earlier this month, Beijing announced plans to merge ChemChina with Sinochem as part of efforts to reshape China's -- and so the world's -- chemicals industry.
It was not immediately clear how this might affect the Syngenta deal while reports in Chinese financial news magazine Caixin said ChemChina was still short of $15 billion to fund the acquisition.
The EU and China are huge trade partners while Beijing has emerged in recent years as an important investor at both government and company level in Europe.