Slovenia's largest retailer Mercator will have to seek the European Commission's approval to take over rival grocer Engrotuš after the Slovenian market regulator found the transaction to be outside its remit.

According to the business news portal Forbes Slovenija, the Competition Protection Agency threw out Mercator's concentration application.

The agency's director Andrej Matvoz told the portal the reason was "the concentration reaches EU proportions".

The European Commission decides on a concentration if the companies concerned generate more than €5 billion in combined revenue on the global market, or if the revenue of each of at least two companies concerned exceeds €250 million on the EU market, unless each generates more than two-thirds of its revenue on the EU market in a single member state.

Both Mercator and Engrotuš exceed the threshold under the second condition, according to Forbes.

Mercator reported its concentration with Engrotuš to the Slovenian regulator on 23 October last year, nearly a month before the acquisition contract was signed.

Now it will have to refer the application to the Commission, which the news portal writes will prolong the completion of the takeover for at least two years.

Mercator, which is owned by the Croatian group Fortenova, is planning to take over 100% of Engrotuš, without the cosmetics stores business Tuš Drogerija.

If the takeover is cleared, Fortenova will control roughly 35% of the Slovenian retail market. Operating some 460 shops, Mercator holds roughly 25% of the market and Engrotuš has a 10% market share with about 260 stores.

Unofficially, Fortenova offered to pay €30 million for Engrotuš, outbidding the German supermarket chain Rewe.