Porsche SE won European Union antitrust approval of its plan to gain a controlling stake in Volkswagen AG, Europe’s largest automaker.

Combining the German carmakers wouldn’t harm competition, the European Commission said in a statement today. The decision allows Porsche to add 4.9 percent to its existing 31 percent holding through a share-purchase agreement, giving it “de facto” control of Volkswagen, the commission said.

“Overlaps between Volkswagen and Porsche are limited,” the Brussels-based commission said.  “Porsche will continue to face several strong, effective competitors with significant market shares.”

The approval helps Porsche, maker of the 911 sports car, toward its goal of gaining control of Volkswagen. Wolfsburg, Germany-based Volkswagen today said second-quarter profit rose 35 percent on sales of its Tiguan sports-utility vehicle and new car models. Porsche and Volkswagen have cooperated for “many years” on SUVs, the commission said.

Volkswagen rose 13.53 euros, or 6.9 percent, to 209.55 euros in German trading before the EU announcement. Volkswagen’s stock has risen 30 percent this year, buoyed by Porsche’s takeover approach, while the nine-member Bloomberg Europe Autos Index has fallen 15 percent.

Volkswagen’s workers and its home state of Lower Saxony, which owns 20 percent, have resisted Porsche’s effort to gain control. Lower Saxony said in May that it has no plans to sell its shares to Porsche.

“Today’s decision was what we expected,” Christian Budde, a spokesman for the Lower Saxony government, said in an interview.

Porsche, based in Stuttgart, Germany, said in April that it won’t make any major moves at Volkswagen before receiving the necessary approvals from national regulators. Countries that need to sign off stretch from Australia to Ukraine, Porsche spokesman Frank Scholtys said today.

“Only when all the cartel decisions come in can the next step of raising our stake to a majority be taken,” said Scholtys. “The process could be over by October.”

The commission separately is challenging Germany over a law giving Lower Saxony a veto over some decisions at Volkswagen. The EU agency, which won a court case to overturn an earlier German law covering Volkswagen in October, warned the federal government June 5 that it may face a second lawsuit and possibly fines for failing to strip state controls at the company.

Porsche is Volkswagen’s biggest share holder with more than 30% of its shares and has said that they are confident of building up their stake.

Source: Bloomberg.com