WASHINGTON (AP) _ The Scotts Co. has agreed to sell its Peters brand fertilizer business in order to proceed with its $200 million purchase of industry leader Miracle-Gro Products, the Federal Trade Commission said Monday.

The agreement settles an FTC antitrust complaint against the merger on ground that it would lead to increased prices and substantially lessen competition in the water-soluble fertilizer market.

Scotts and Miracle-Gro jointly account for 80 percent of the U.S. market for water-soluble fertilizers, which are widely used by consumers on shrubs, gardens, houseplants and flowers, according to the FTC's complaint.

Under the proposed agreement, which is subject to public comment, Scotts of Marysville, Ohio, will sell its Peters Consumer Water Soluble Fertilizer Business to a buyer approved by the commission by Dec. 31, 1995.

Miracle-Gro, the top seller of water-soluble fertilizer in the United States, is based in Port Washington, N.Y.