German car-parts supplier, ZF Friedrichshafen, has won European Union approval for its $13.5 billion acquisition of U.S. rival TRW Automotive.
Although the two parties still have a number of outstanding issues to sort out, the decision by the EU competition authorities eliminates an important block to the creation of the world's second largest automotive supplier.
The permission is subject to certain conditions, one of which is that ZF sells TRW's chassis components business in the European Economic Area.
Announced in September, the merger will create an automotive parts supplier with potential annual revenue of about $41 billion, ranked second after Germany’s Robert Bosch GmbH and ahead of Japan's Denso Corp. Both TRW and ZF own important remanufacturing facilities.
The Commission had concerns that the deal as notified "could have led to price increases for chassis components because the few remaining players in this market would have been unable to sufficiently constrain the merged entity," the EU Commission said.
ZF's main shareholder is the Zeppelin Foundation, the heir to the industrial empire founded by Ferdinand von Zeppelin in 1915 to produce gears for German airships.
TRW makes brakes and air bags, along with other safety parts, while ZF specializes in transmissions and steering systems, along with other critical parts.