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The takeover will create Europe's second largest car maker and includes two UK car plants employing 4,500 workers.
The European Commission has unconditionally approved the £1.9bn takeover of Vauxhall owner Opel by car maker PSA.
It means the French company, which owns Peugeot, has cleared one of the last potential regulatory hurdles to its acquisition of the business from America's General Motors (GM).
The deal will create Europe's second largest car maker.
Vauxhall employs 4,500 people at car plants in Luton, where the Vivaro van is produced, and Ellesmere Port, which turns out its Astra cars.
The Commission concluded that the deal "would raise no competition concerns in the relevant markets" as the newly enlarged company would still be up against the likes of Renault, Volkswagen, and Ford, as well as Asian rivals.
Patrice Lucas, PSA strategy director, said the decision was "an important step". But European regulators are still reviewing the takeover of GM's European finance operations by BNP Paribas and PSA.
A decision is expected to be made in the second half of the year.
PSA struck a deal to buy GM's loss-making European operations earlier this year. The bulk of the business is represented by Germany's Opel.
The French car maker tried to allay fears that the deal would result in job losses or factory closures, saying it intended to manage the group by honouring existing commitments to workers.
Ellesmere Port and Luton have production contracts due to run to 2021 and 2025 respectively.
But while PSA signalled a medium-term commitment to the workforce, it has said future investment would be dependent on performance.
It is aiming for cost savings of around £1.5bn across the business by 2026.
There have been fears that Brexit could make the UK plants, currently the most efficient in Europe, less competitive, should new trade barriers spring up.
The EC announcement comes as industry figures show Britain's new car market decline for a third month in a row in June.
Just over 243,000 new cars were registered, down 4.8% on the same month last year, according to the Society for Motor Manufacturers and Traders (SMMT).
(SKY NEWS)
