Siemens has been given the green light to buy a US company which manufactures equipment for gas and steam turbines.
The European Commission approved the $7.8 billion (£4.9bn) merger with Dresser-Rand following an in-depth investigation launched in February this year.
The two companies supply turbo compressors as well as the engines which drive these compressors such as aero-derivative gas turbines (ADGT), industrial gas turbines (IGT), steam turbines and electric motors.
The Commission had concerns the merger would reduce the number of suppliers of those technologies from three to two, which could lead to less product variety and ultimately higher prices.
It however found the transaction would not have a negative effect on competition in the European Economic Area.
Commissioner Margrethe Vestager, in charge of competition policy said: “After a detailed assessment of the markets involved, the Commission is satisfied that European consumers will not be negatively affected by the merger.”