The European Commission approved on Wednesday Microsoft's nearly 5.5-billion-euro takeover of the mobile phone business of Finland's Nokia which once dominated the global industry.
The acquisition does "not raise any competition concerns, in particular because there are only modest overlaps between" the two companies, the Commission said in a statement.
The links that do exist between existing Microsoft activities and Nokia's smartphone devices "are unlikely to lead to competitors being shut out from the market," it said.
In smartphones and tablets, the two companies face "several strong rivals, such as Samsung and Apple (who) will continue to compete with the merged entity," it said.
Software giant Microsoft would also have little incentive to restrict use of its Windows operating system for other device makers or of its mobile apps, it said.
Once the world leader in mobile phones, Nokia lost its top place to South Korea's Samsung in 2012, especially as its rivals took the lead in the key smartphone market.
Explore further: Nokia shareholders approve mobile phone sale to Microsoft (Update)