OTTAWA (Reuters) -Canada's Competition Bureau on Tuesday said it had identified major competition concerns around the proposed merger between U.S. grains merchant Bunge and Glencore-backed Viterra.

In a statement accompanying a formal report to Ottawa, the bureau said the deal was "likely to result in substantial anti-competitive effects and a significant loss of rivalry between Viterra and Bunge in agricultural markets in Canada".

It also determined the transaction was to likely to harm competition in markets for grain purchasing in Western Canada, as well as for the sale of canola oil in Eastern Canada.

The bureau said last June it would review the merger, which would create an agricultural trading giant worth about $34 billion, including debt.

The two companies said in a joint statement that the bureau's concerns were misplaced and vowed to work with Canadian authorities to provide more information.

The non-binding report was sent to Canada's transport ministry, which has until June 2 this year to review the deal. The federal Canadian government will take a final decision.

The bureau also found Bunge could influence the economic behavior of Saudi-owned G3, a major competitor to Viterra. As a minority shareholder of G3, Bunge has access to confidential competitively sensitive information, the bureau said.

The deal would bring the combined company closer in scale to leading rivals Archer-Daniels-Midland and Cargill.

Bunge has filed for regulatory approvals for the merger in "major jurisdictions" in North and South America, Europe and China, Chief Executive Officer Greg Heckman said last November.

The two companies reiterated that they expected the transaction to close in the middle of 2024.

"We are pleased the regulatory process is advancing and are confident the transaction will yield considerable benefits to Canada," they said.