The regulator will launch an in-depth study of the acquisition from Galeries Lafayette SA, which was announced in June, after an initial review raised "serious concerns" about Casino's resulting dominance of Parisian supermarkets.

"The transaction threatens to strengthen the position of Casino in some Paris shopping areas where stores under the Monoprix or Monop banners are located near stores under the Casino group banners," the regulator said Wednesday, March 13, following the conclusion of its initial review. The in-depth review is likely to take 65 days and could be extended.

France's Casino said that it had expected the deal would be the subject of a so-called Phase Two investigation. It anticipates a decision on the acquisition during the summer.

Casino agreed to buy Galeries Lafayette's 50% stake in Monoprix following mediation by the Commercial Court of Paris that resolved a dispute over the stake's valuation. Casino had a call option on the stake and valued it at about €700 million, while Galeries Lafayette had a put option and valued its holding at €1.3 billion. That agreement entails an Oct. 30 deadline for the stake's transfer.

The French Competition Authority has the power to block the deal or to require that Casino sell some of Monoprix's roughly 400 outlets to a competitor. In January 2012, the regulator warned that Casino already had too much control over Parisian supermarkets, where its operations are 3 times larger than its closest rival, Carrefour SA.

Shares in Casino have fallen almost 2% since their Tuesday close, the last one prior to the regulator's announcement. They traded Thursday at €78.47, down 0.4% on Wednesday. Casino has a market capitalization of €8.84 billion.