The European Commission has opened an in-depth investigation into the proposed takeover of Reuters Group by Canadian financial information company Thomson.
"The Commission's initial market investigation indicates that the proposed merger would raise serious doubts as regards adverse effects on competition in several markets of the financial information sector," it said in a statement.
The launch of the in-depth inquiry does not prejudge the final outcome of the investigation, the Commission said.
The planned merger, a cash and share deal worth 8.9 billion pounds ($18.14 billion), would create the world's leading provider of news and data for professional markets.
Reuters and Thomson said they would work with the Commission to resolve the issues raised, adding that competitive conditions in the industry were complex and evolving.
The companies also said the U.S. Department of Justice would provide them with a decision by Jan. 15.
"Our discussions with both sets of regulators have been constructive and have developed in line with our expectations," Reuters Chief Executive Tom Glocer said in a statement. Glocer, who would head the combined business, said he remained hopeful the transaction will be completed in or around the first quarter of next year.
The Commission now has 90 working days, until Feb. 25, to decide whether the deal would significantly impede competition.
Thomson notified the takeover to the European Union's top antitrust regulator on Sept. 3 and the Commission said initial checks raised competition concerns.
Those worries cover the supply of financial information, such as data-feeds, access to specific financial information databases and real-time broker reports, and the provision of news services, the Commission said. "Most of these products are predominantly used in off-trading floor activities of financial institutions."
The investigation will focus on whether a merged group "would be likely to give rise to adverse effects" given the size of the two companies, the Commission said. "This may have an impact on other providers of financial information which integrate the financial products concerned into their own offerings, as well as on financial institutions and final customers of such products," the statement said.
The two companies have met the European Commission, the U.S. Department of Justice, the Canadian Competition Bureau and regulatory authorities in various other countries.
Reuters and Thomson compete in major markets with privately-held Bloomberg LP as well as other, smaller financial news and data providers.
Shares in Reuters closed down 1.2% at 650 pence ahead of the European regulator's announcement, while Thomson shares traded in New York were down 1.6% at $44.25.