(BRUSSELS) - The European Commission approved on Wednesday the proposed merger of troubled Japanese electronics maker JVC and fellow high-tech firm Kenwood Corp.

Europe's top competition watchdog said it gave its go-ahead to the deal after it concluded that the deal "would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it." The two Japanese firms announced the merger plan in May after forming a strategic alliance last year when they agreed to consider bringing together their operations under a single holding company.

Victor Co of Japan Ltd. (JVC), an affiliate of Panasonic maker Matsushita Electric Industrial Co., produced Japan's first television set and was the pioneer of VHS video recorders.

But it has recently struggled in an increasingly competitive electronics market and said in April that it would stop almost all domestic production of flat-panel televisions.

The European Commission opined that the business overlaps in the proposed merger would be limited in most markets, and that the new entity "would continue to face several significant competitors in the markets for car electronics, home electronics and mobile electronics."

It added that "customers would continue to have access to a sufficient number of alternative suppliers."

Under the merger scheme the JVC and Kenwood brands will be kept. Their combined sales for the year ended March 31 came to around 820 billion yen (8.0 billion dollars, 5.0 billion euros).

Text and Picture Copyright 2008 AFP. All other Copyright 2008 EUbusiness Ltd. All rights reserved. This material is intended solely for personal use. Any other reproduction, publication or redistribution of this material without the written agreement of the copyright owner is strictly forbidden and any breach of copyright will be considered actionable.