BERLIN (Reuters) - Germany needs to keep a closer eye on the influence of funds and institutional investors on German business because they may be distorting competition, the head of the Monopolies Commission said on Tuesday.

Large investors, such as U.S. wealth manager Blackrock <BKCC.O> or Norway's sovereign wealth fund, have stakes in numerous German companies that are partly in competition with each other, Achim Wambach said in Berlin.

This trend is especially pronounced in sectors such as computer manufacturing, optical and electronic equipment, as well as machinery and vehicle construction, he said.

"There is the danger that competition could be impeded," said Wambach, who is chief of the independent commission that advises the government on competition policy. There are already initial indications of distorting effects on competition, he added.

Wambach said Germany's cartel office should take a close look at drugmaker Bayer's <BAYGn.DE> $66 billion takeover of U.S. seeds company Monsanto <MON.N>, since Blackrock has holdings in both companies.

"The cartel office should at least cast an eye on it," he said.

On the whole, however, there was no reason for competition concerns since the concentration of companies in Germany had fallen, he added.

In addition, the interrelationship of its 100 biggest companies had also declined, he said, referring to multiple mandate holders in supervisory boards and mutual capital shares.

(Reporting by Rene Wagner; Writing by Caroline Copley; Editing by Tom Heneghan)