AT&T set to sell its 22% stake in Telewest
The commission is ready to give its formal approval to the joint venture, in a move that would clear one of the hurdles in BT and AT&T's attempts to achieve regulatory approval for the deal.
The US Department of Justice and the Federal Communications Commission is still investigating the alliance.
The European Commission, which has been investigating the agreement since last October, has concluded that the alliance should be allowed to go ahead provided that AT&T sells some of its assets in the UK.
Karel van Miert, the European competition commissioner, reportedly told an audience in Belgium on Thursday evening that he was ready to clear the deal if the disposals were made.
A formal statement is expected in the next few weeks.
The news raises the prospect of AT&T being forced to sell ACC, its subsidiary which sells long-distance telecom services to UK business customers. The company, which employs 400 people, currently has approximately 2 per cent of the UK long-distance market.
AT&T also has a 21.6 per cent stake in Telewest, the UK's second-largest telecom operator, as well as a UK communications business employing 500 people.
AT&T is unlikely to object to the conditions as it is does not see the businesses as central to its objectives.
AT&T acquired ACC when it bought Teleport, the US local access operator. Meanwhile, it inherited the Telewest stake as the result of its acquisition of TCI, the US cable and media operator.
According to analysts, ACC would be likely to fetch several hundreds of millions of pounds for AT&T. However, any sale is likely to incur a large tax charge for the US group because of the way in which it accounted for its merger with Teleport.
The stake in Telewest, meanwhile, is currently worth more than pounds 1bn and it is likely to be seen by other players in the cable industry as a possible launch pad for further consolidation.
An AT&T spokesman refused to comment yesterday. "We cannot comment on the states of inquiries in the process of considering the venture," he said.
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