Lucent and Alcatel Monday cleared another hurdle to their merger plan after the European Commission approved the proposed deal.

The Commission said the merger wouldn’t significantly impede competition in Europe. The companies both sell optical core switches and Digital Subscriber Line Access Multiplexers (DSLAM), but despite the large market share that the new company would have in those areas the market for those and other products would remain competitive, the Commission determined.

The U.S. Federal Trade Commission gave its stamp of approval to the merger in June. The agreement is still subject to approval by shareholders of both companies who will vote during meetings scheduled for early September. The companies expect to complete the deal by year-end and have already released information about the organizational structure for the new company.

After reporting a drop in earnings for the second quarter, Lucent recently warned that its third-quarter profit and revenue would be lower than expected. Alcatel has fared a bit better since the merger announcement, reporting revenue growth for the second quarter.

The companies announced their plan to merge in April, creating a networking giant that would have pulled in $25 billion in revenue last year. The companies think they'll fit together nicely in part because of their respective geographic reaches. Lucent has historically been strong in North America and Alcatel has a powerful customer base in Europe. The new company will compete with vendors including Siemens and Telefonaktiebolaget LM Ericsson.

The IDG News Service is a Network World affiliate.