Dow Chemical Co. and DuPont Co. are expecting to get formal objections to their $60 billion merger from European Union regulators as soon as next month, listing potential antitrust concerns with their bid to form the world’s biggest chemical company, according to two people familiar with the investigation.

The European Commission in Brussels is poised to send the complaint to the companies in December, according to people who asked not to be named because the process is confidential. It may lay out how the transaction could reduce competition in areas such as crop protection, seeds and certain petrochemicals.

The merger is among a trio of pending deals -- including  Bayer AG’s agreement to buy Monsanto Co. and China National Chemical Corp.’s agreement to buy Syngenta AG -- that could reshape the agricultural-chemicals industry. EU Competition Commissioner Margrethe Vestager has warned that the deals could leave the sector "quite concentrated."

"I think we are looking at a process where Dow-DuPont is in much more trouble than the other two deals," said Alan Riley, senior fellow at the Institute for Statecraft, a London-based think tank. "They are both funding R&D in the same fields so there is a real issue of innovation loss from the deal" that might be difficult to eliminate with guarantees to regulators promising good behavior.

Dow-DuPont was the first to get an extended probe by the EU and now has a Feb. 28 deadline for a final decision. Regulators last month also opened a longer investigation of China National Chemical’s bid for Switzerland’s Syngenta. Bayer is yet to file for EU approval to buy Monsanto.

‘First Quarter’

Dow and DuPont are "continuing to work constructively with the European Commission to address their questions and to obtain clearance for the merger," the companies said in separate e-mails. "We continue to expect the merger to close in the first quarter of 2017."

DuPont fell 1.9 percent to $67.77 at 10:51 a.m. in New York, paring losses of 2.3 percent. Dow declined by 1.8 percent to $52.48 after falling as much as 2.1 percent.

The European Commission declined to immediately comment.

EU Delays

The Dow-DuPont deal has already been beset with delays as the EU twice suspended the review to seek more information from the companies. An initial plan to close the deal late this year had to be revised as regulators took more time to scrutinize the transaction.

A statement of objections details potential problems that companies need to address before regulators could approve the deal. The EU can accept concessions including unit sales and licensing pledges if it believes these will allow competition to flourish after the merger. Officials dismissed as insufficient concessions the companies made in July.

While a so-called SO is often a sign of difficult negotiations with regulators, some companies wait for regulators to issue the complaint before trying to address their concerns. The specifics in the documents can make it easier for companies to tailor concessions that will appease EU officials.

The charges from the EU could signal wider concerns about the deal from antitrust officials in the U.S. and other regions as regulators around the world increasingly cooperate on global mega deals.

In the U.S., the Dow-DuPont deal is also being looked at by a group of U.S. state attorneys general to determine its effect on competition, people familiar with the review said earlier this month. About 10 states, including California and Iowa, are scrutinizing the transaction to determine how it affects farms, said the people.

BASF told antitrust regulators in Brazil that the merger would threaten competition in the markets for insecticides and genetically modified seeds. Dow-DuPont would have "absolute dominance" in corn seeds that are genetically modified to control insects, BASF told the country’s antitrust authority CADE in a public filing.

--With assistance from Jack Kaskey.

To contact the reporters on this story: Gaspard Sebag in Paris at [email protected]; Aoife White in Brussels at [email protected]

To contact the editors responsible for this story: Anthony Aarons at [email protected]

Peter Chapman

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