Rewe's plan to buy Tengelmann's Plus stores in the Czech Republic will face a domestic anti-trust investigation after the EU passed control of the probe back to local authorities.

Rewe, the German retail giant, struck a deal in March to buy the 146 stores in the Czech Republic and is looking to merge the chain with its own discount business, Penny.

If approved, the deal would create a company of 317 stores, which would generate over EUR1.2bn (US$1.9bn) in sales.

The European Commission said today (4 July) that it had agreed to allow the Czech Competition Authority to rule on the takeover.

"The Czech Competition Authority requested the Commission to refer the notified transaction to it because it considers that the transaction would affect competition in a number of local retail markets within the Czech Republic, which present all the characteristics of distinct markets and which do not constitute a substantial part of the [European] Single Market," the Commission said.

"The Czech Competition Authority submits that the transaction would threaten to significantly affect competition in these markets."

Rewe, which also runs 96 Delvita supermarkets in the Czech Republic alongside a 181-strong chain of Billa stores, could not be reached for immediate comment.