The European Commission approved Porsche's planned takeover of Volkswagen, paving the way for the German sports car maker to buy Europe's biggest auto maker.
"After examining the operation, the commission concluded that the transaction would not significantly impede effective competition," Europe's top anti-trust watchdog said in a statement.
Porsche has said since early March that it planned to take over VW, Europe's biggest automaker, and has been waiting for the approval of various competition authorities.
Earlier this month, Porsche said it wants to build up its VW stake to almost 36 per cent by early September, giving it power to set the agenda at VW general assemblies.
A Porsche spokesman said at the time that the company aimed to gradually lift its stake to over 50 percent once authorities had given their blessing.
"The commission's examination of the transaction showed that horizontal overlaps between Volkswagen and Porsche are limited and that, for all car segments concerned, Porsche will continue to face several strong, effective competitors," the EU regulator said.
"The commission also considered potential effects of the merger on the markets for the manufacture and supply of spare parts and on distribution markets but concluded that the transaction would not lead to any negative effects on these markets," it added.
Porsche is seeking separately to counter efforts by the German government and the state of Lower Saxony, where VW is based, to retain a blocking minority held by the state, which owns around 20 percent of the shares in VW.
In June, the commission gave Berlin until early August to change the law shielding VW from hostile takeovers and threatened otherwise to challenge it before an EU court, where Germany already lost one case on the law.
