The European Commission (EC) will carry out an in-depth investigation of the proposed Bayer-Monsanto merger due to concerns about reduced competition in pesticides, seeds and plant traits.

The US$66bn merger, first announced in September 2016, would form the largest integrated company in pesticides and seeds, and the combination of two competitors with “leading portfolios” of non-selective herbicides, seeds, plant traits and digital agriculture.

However, it could reduce competition by dragging up prices, lowering product quality and resulting in less choice and innovation in the marketplace, the EC said in a 22 August statement.

“Seeds and pesticide products are essential for farmers and ultimately consumers. We need to ensure effective competition so that farmers can have access to innovative products, better quality and also purchase products at competitive prices and at the same time maintain an environment where companies can innovate and invest in improved products,” commissioner Margrethe Vestager, in charge of competition policy, said.

Monsanto’s glyphosate pesticide product was the most sold non-selective herbicide in Europe with Bayer’s glusofinate ammonium as one of its few competitors, which EC felt would cut competition in herbicides and pesticides against varroa mites, a parasite affecting bee colonies in Europe.

The EC noted that both Monsanto and Bayer were active in breeding crop and vegetable seeds, with Monsanto having the highest market share in rapeseeds in Europe and Bayer holding the highest share on the same crop globally, meaning they were two of the “few players with the means to compete intensively in this market”.

Finally, the EC’s investigation showed that Bayer was one of Monsanto’s rare competitors in certain plant trait markets and had developed alternative herbicide tolerance traits to Monsanto’s.

“The Commission will investigate in particular whether the transaction could lead to a reduction of competition in these markets, taking into account the existing links between the few worldwide competitors through cross-licensing and through research and development cooperations,” the EC said.

The EC was notified of Bayer’s and Monsanto’s intention to merge on 30 June 2017 and it the companies submitted on 31 July commitments to address some of the commission’s initial concerns about the deal, but the EC considered them insufficient.

The commission has until 8 January 2018 to make its final decision on the merger.