Superior Plus Corp.’s bid to merge with rival Canexus Corp. faces a challenge from the U.S. Federal Trade Commission on concern that the combination would reduce competition in North America for a compound used in making paper, tissue and diapers.

Superior and Canexus are two of the three largest producers of sodium chlorate, used as a bleaching agent, the FTC said Monday in a statement on its website.

“By combining more than half of all North American sodium chlorate production capacity in the merged Superior and Canexus, the acquisition is likely to lead to anticompetitive reductions in output and higher prices,” the commission said in the statement.

Superior announced the proposed takeover in October. The deal is currently worth C$292 million ($223 million), representing a 21 percent premium for Canexus shareholders, according to data compiled by Bloomberg. Superior supplies sodium chlorate to the pulp and paper industry as well as supplying propane and distributing industrial insulation, according to its website.

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