Italian automaker Fiat won unconditional approval from the European Commission on Friday to acquire bankrupt U.S. automaker Chrysler CBS.UL as the EU executive said the deal would not hurt competition.

The Commission, top antitrust watchdog of the 27-country European Union, said the deal would not change the competitive structure of markets for the manufacture and supply of cars.

The Commission's examination of the transaction showed that the horizontal overlaps between the activities of Chrysler and Fiat are limited, it said in a statement.

As Chrysler is not present on the upstream markets concerned, the transaction would not strengthen the market position of the merged entity or the extent of its vertical integration, it said.

A Fiat spokesperson had no comment. Shares of the company were down 1.54 percent, underperforming a 1.06 percent rise in the DJ Stoxx European auto index .SXAP.

The Italian industrial group acquired an initial 20 percent stake in Chrysler and entered into a number of agreements to give it access to Fiat technology, platforms and power trains.

Fiat may increase its stake in the future, and holds rights in the decision-making process of the U.S. firm that will enable it to exercise sole control, the Commission said.

Over time, Fiat could eventually own more than 50 percent after Chrysler has repaid its loans to the U.S. Treasury.

Chrysler, which produces cars and trucks under the brand names Chrysler, Jeep and Dodge, filed for bankruptcy in April.

It announced its industry-changing deal with Fiat after being pummeled by sliding auto sales and unable to reach agreement on restructuring its debt.

The company derives more than 90 percent of its turnover in North America and has no manufacturing facilities in Europe.

As part of the deal, the U.S. government provided up to $3.5 billion in debtor-in-possession financing and up to $4.5 billion in exit financing to Chrysler when the company filed for bankruptcy.

The deal was hailed by U.S. President Barack Obama as a critical step that would save 30,000 jobs at Chrysler, majority-owned by Cerberus Capital Group CBS.UL, and hundreds of thousands more jobs at affiliated suppliers and dealers.

(Additional reporting by Gianni Montani in Milan; Editing by Dale Hudson)