(Bloomberg) -- Canada’s antitrust watchdog raised concerns about Bunge Ltd.’s proposed acquisition of Viterra Inc., saying it will have “substantial anti-competitive effects” on the country’s agricultural markets.  

The Competition Bureau raised a red flag over Bunge’s 25% stake in G3 Global Holdings, a joint venture with a Saudi firm that operates grain facilities in Canada and is a major competitor to Viterra. If the deal is allowed to go through, Bunge will have an incentive to “influence G3’s economic behavior to the detriment of competition,” the agency said in a report to Canada’s transport minister.

Any decision to approve or reject the deal lies with the Canadian government, not the competition bureau. 

Bunge struck the $8.2 billion deal for Glencore Plc-backed Viterra last June. If completed, it would unite the company with the most oilseed-crushing facilities in Western Canada with the largest operator of primary grain elevators. 

Read More: Bunge-Viterra Deal Would Create $25 Billion Rival to Cargill

The result would likely be “a significant loss of rivalry between Bunge and Viterra in a number of markets,” less competition for the purchase of canola and lower prices for suppliers, the bureau said. The deal would also have a negative impact on the sale of canola oil in Eastern Canada to customers who cannot receive the commodity by rail, it said.

Combining Bunge and Viterra would create a trader big enough to take on the industry’s elite: Minneapolis-based Cargill Inc. and Chicago’s Archer-Daniels-Midland Co. The deal is the culmination of Bunge Chief Executive Officer Greg Heckman’s transformation of the once-troubled St. Louis-based crop trader into a cash-rich oilseeds champion. 

Bunge said in a statement Tuesday that the “localized concerns” are “misplaced” and that the company “looks forward to working with Transport Canada and the Bureau to provide further information addressing these points.” The agribusiness company said it still expects the transaction to close in the middle of this year. 

Bunge shares were little changed as of 11 a.m. in New York.

--With assistance from Derek Decloet.

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