EU approves AOL-Time Warner deal

The European Commission has approved the £87bn merger between America Online Inc. and Time Warner Inc. on Wednesday on condition that links with German media giant Bertelsmann are cut, a source said.

The European Commission has approved the £87bn merger between America Online Inc. and Time Warner Inc. on Wednesday on condition that links with German media giant Bertelsmann are cut, a source said.

The commission also required that the new company sever ties with a joint venture with Bertelsmann in France, said the source, who spoke on condition of anonymity.

The companies also have provided legal guarantees that they will not unfairly discriminate against other companies that provide Internet content or within the music industry, the Post said.

The merger has faced smoother sailing since Time Warner last week dropped a separate joint venture plan with EMI Group of Britain, which would have created a major music company. European regulators had strongly opposed that deal.

The commission's antitrust division opened a probe into the proposed AOL-Time Warner merger in June, stressing the need for an open, competitive environment in the emerging cyber music and entertainment markets.

The conditions the commission is expected to slap on the deal between the world's biggest Internet company and the entertainment giant are aimed at allowing Bertelsmann to remain an independent competitor in Europe.

Bertelsmann is investing heavily to become the largest supplier of media content via the Internet. Bertelsmann's BMG subsidiary is one of the world's five major music companies.

The AOL-Time Warner merger still has to be cleared by American antitrust authorities, and the EU decision is seen as key for the chances of the merger going through.

Although both companies are U.S.-based, the EU Commission is allowed to examine mergers involving non-EU companies whose sales in Europe are above certain thresholds.