BRUSSELS, June 25 (Reuters) - Candy maker Mars' takeover

of Pringles maker Kellanova ( K ) could lead to price hikes

because it will boost Mars' negotiating power with retailers, EU

antitrust regulators warned on Wednesday as they opened a

full-scale investigation into the $36 billion deal.

The move could force Mars to divest assets to address the EU

competition concerns or risk the deal being blocked.

Mars said it was disappointed with the EU's decision but it

remained optimistic over the outcome of the transaction, which

it hoped to close towards the end of 2025.

"We remain confident the pending combination of Mars

Snacking and Kellanova's ( K ) complementary footprints and portfolios

will deliver more choice and innovation to consumers," said Mars

in a statement.

"Based on the current status of the ongoing antitrust

review by the European Commission, we now expect the transaction

to close towards the end of 2025; however, the exact timing

cannot be predicted with any certainty at this point. We look

forward to delivering the benefits of the pending transaction to

all Mars and Kellanova ( K ) stakeholders," it added.

Mars announced the deal last August, among the biggest in

the sector, that would bring brands from M&Ms, Snickers and

Whiskas to Pringles, Pop-Tarts and Kellogg cereals under one

roof.

The EU competition enforcer said the deal would boost Mars'

product portfolio, giving it increased leverage to extract

higher prices during negotiations with retailers and in turn

would lead to higher prices for consumers.

It said both companies have a strong market position in

several product markets in multiple EU countries due to their

brands seen as must-have for consumers.

The Commission also cited concerns from some European

retailers about Mars' increased bargaining power and that they

may be forced to accept higher prices, in order to avoid not

being able to offer the products of Mars and Kellanova ( K ).

"As inflation-hit food prices remain high across Europe, it

is essential to ensure that this acquisition does not further

drive up the cost of shopping baskets," EU antitrust chief

Teresa Ribera said in a statement.

The Commission set an Oct. 31 deadline for its decision.

Reuters exclusively reported on June 18 that the deal would

trigger intensive EU regulatory scrutiny.

European retailers have voiced worries about the power of

large international suppliers of branded packaged goods and the

high concentration levels in products such as breakfast cereals,

carbonated drinks, confectionery and frozen desserts.