The FNE's decision comes three months after Chile´s government under former President Michelle Bachelet requested regulators investigate a potential fusion between the two lithium miners, alleging it would distort the global market for the key ingredient in the batteries that power electric vehicles.

China's Tianqi said in May it would buy nearly a quarter of SQM from Canada-based fertiliser company Nutrien Ltd for $4.1 billion (£3 billion).

"In our investigation, the FNE will seek to verify, or dismiss, whether anti-competitive risks in Chile ... are plausible, and of a magnitude that makes them relevant," the FNE said in a statement.

Tianqi said it will continue to cooperate with regulators.

"We don´t believe this transaction implies competitive risks, but obviously the FNE needed more time to complete its investigation," Tianqi legal adviser Claudio Lizana said in a statement.

The sale, if approved by regulators, would leave Tianqi just shy of a controlling stake in SQM and likely entitle the company to appoint three seats on its board.

Chile development agency Corfo, which oversees SQM's lithium leases in the Salar de Atacama, said in a complaint filed with the FNE in March that the deal would give Tianqi and SQM control of 70 percent of the global lithium market.

Tianqi's interest in SQM comes as Beijing aggressively promotes electric vehicles to combat air pollution and help China's domestic carmakers leapfrog the combustion engine to build global brands.

The FNE said information gathering to determine admissibility of the case was insufficient to gauge the antitrust risks, prompting its decision to launch a full investigation.

"There is no time limit to determine the duration of the investigations the FNE conducts," the statement said.

The timing may prove critical.

Chinese and Indian regulators have given Nutrien - formerly Potash Corp of Saskatchewan - 18 months from Nov. 2, 2017, to offload its stake in SQM to meet regulatory requirements after its merger with a rival fertiliser company.

If the FNE determines the purchase presents antitrust risks, it can take the case before Chile´s TDLC antitrust court, or reach a settlement with the parties, which would also need the court's approval.

If no such risks exist, the case would be closed, the FNE statement said.

(Reporting by Aislinn Laing and Dave Sherwood in Santiago; Editing by Matthew Lewis)

By Dave Sherwood and Aislinn Laing