Europe’s antitrust watchdog has opened an in-depth investigation into a proposed joint venture between Celanese and private equity group Blackstone over concerns it could hurt competition in the acetate tow market.

The Commission said that a preliminary review of the merger showed that it would create a new market leader in an already highly concentrated market.

Celanese and Blackstone are already the respective second and third largest producers of acetate tow worldwide, excluding China. The watchdog said that the remaining two major competitors, Eastman Chemical and Daicel, “would not exert sufficient competitive pressure on the merged entity”.

The Commission is also worried that in an industry which is characterized by high barriers to entry, such a merger would make “tacit coordination” between tow suppliers more likely.

Blackstone acquired Solvay’s acetate tow business, Acetow, in June of this year in a move that valued the German-based business at €1 billion. That same month, the US investment group agreed to bring the Acetow business, regarded as the fourth-largest filter tow player globally, into a new joint venture with Celanese.

The Texas specialty materials company plans to contribute its cellulose derivatives business for $1.6 billion and a 70% share of the venture, with Blackstone taking the remainder. The companies said at the time that the deal would create a global leader with about $1.3 billion in annual revenue and around 2,400 employees.

The Commission has until Mar. 5, 2018, to make a decision on the merger.