Japanese electronics maker Panasonic Corp on Tuesday gained approval from European Union antitrust regulators to acquire rival Sanyo Electric Co Ltd on condition it sheds some units.

The European Commission, the competition watchdog of the 27-nation EU, said in a statement that Panasonic would need to sell battery production facilities in markets where the Commission identified competition concerns.

Panasonic earlier this month offered to divest some businesses to gain EU regulatory approval.

In view of the remedies offered, I am satisfied that competition will remain vigorous after the merger and that purchasers of batteries will continue to benefit from choice and competitive prices, EU Competition Commissioner Neelie Kroes said.

Without some unit sales, the merged entity would have a significant market share in batteries used in alarms and utility meters, portable rechargeable nickel-metal hydride batteries and rechargeable coin shape batteries based on lithium, the Commission said.

The companies will sell a battery production factory and one of the parties' portable nickel-metal hydride businesses to eliminate any increase in market share in this product market, the EU executive added.

Panasonic, the world's No. 1 plasma TV maker, said in December last year it would spend up to 400 billion yen ($4.34 billion) to buy Sanyo to strengthen its position in the rechargeable battery and solar power equipment markets.

Panasonic, which vies with Sony Corp for the title of the world's largest consumer electronics maker, won approval from Japan's antitrust regulators this month for the deal.

The Commission said it had examined consumer electronic product markets such as camcorders and flat panel televisions where Panasonic and Sanyo are active and found limited increase in market share after the merger and raised no competition concerns.

Panasonic plans to start the tender offer for Sanyo shares soon after it wins regulatory approval in 11 countries and regions including China, Europe and the United States.

Sanyo, the world's largest maker of rechargeable batteries, is developing lithium-ion batteries for cars with Volkswagen AG. Panasonic operates an auto battery joint venture with Toyota Motor Corp.

(Editing by David Cowell)

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