The European Commission is to carry out a full assessment of the proposed acquisition of the industrial chocolate business of Archer Daniels Midland Co (ADM) by Cargill Inc., Reuters reported.

This decision stems from concerns that the deal could restrict competition and lead to higher prices.

The European Union's executive body said on Feb. 23 that it has opened an in-depth investigation to assess whether the merger plan is in line with the EU Merger Regulation. The two U.S.-based companies supply industrial chocolate as well as fat-based coatings and fillings.

Industrial chocolate is used by customers in the food processing industry to produce end-consumer products such as cookies, ice cream and chocolate confectionery.

A preliminary investigation by the Commission highlighted potential competition concerns in the supply of industrial chocolate to customers in Germany and the United Kingdom, where Cargill, ADM and Barry Callebaut are the main suppliers. The Commission found that smaller competitors for the supply of industrial chocolate have a more limited presence and do not pose a sufficient competitive constraint on the major players.

As such, the proposed merger "could eliminate an important competitor and reduce the choice of suitable suppliers in already concentrated markets, which could lead to price increases."

The Commission now has until July 8, 2015, to investigate the proposed acquisition in-depth and determine whether its initial concerns are correct.

The deal was previously expected to close by July 1. Representatives of the two companies told Reuters that they still hope to complete the transaction in mid-2015.