EU regulators have approved the €12.4 billion (£9.1bn) buyout of French firm Alstom’s power equipment business by US-based General Electric.
It is however subject to GE selling Alstom’s heavy duty gas turbines, which are mainly used in gas-fired power plants, to Italian rival Ansaldo.
The European Commission expects the move to help Ansaldo become a strong new competitor in the market.
GE is currently the world’s largest manufacturer of gas turbines and Alstom is the third out of four players globally, according to the Commission.
Commissioner Margrethe Vestager, in charge of competition policy, said: “Divestment of Alstom’s key technology to produce heavy duty gas turbines to Ansaldo will ensure that European business and consumers continue to benefit from this innovation and know how.
“Furthermore, advanced heavy duty gas turbine technology is crucial to face the challenges of climate change and modernising our energy supply. It is the most efficient, cleanest and flexible fossil fuel power generation technology and an important complement to more unpredictable generation from renewables – when the wind stops blowing it is mostly flexible gas-fired plants that can step in.”
The approval follows an investigation launched earlier this year.