The companies involved have proposed moves to address perceived competition problems in the aerospace market, an EC statement said, clearing the way for the creation of a serious challenger to the US-dominated sector.

EADS would be formed by the merger of DaimlerChrysler Aerospace AG (DASA), Aerospatiale-Matra (AM), which is controlled by Lagardere and the French state, and Spanish national SEPI's Construcciones Aeronauticas SA (CASA).

With combined sales of 23 billion euros (20.7 billion dollars), based on 1998 figures, and 96,000 employees, EADS would be Europe's largest aerospace company and the third-largest globally, behind Boeing and Lockheed Martin.

In a joint statement EADS' co-chairmen designates Rainer Hertrich, from DASA, and Philippe Camus, from AM, said: "As planned, the company can be founded and the initial public offering can take place this summer."

The EC approval comes on condition that "competition concerns" in two satellite equipment markets -- antenna relfectors and central tubes -- are met, a commission statement said.

This includes Aerospatiale Matra unit Aerospatiale-MatraLanceurs's sale of its rights to satellite antenna reflectors and central tubes.

Other commitments include the sales of intellectual property rights, the transfer of employees or, at the buyer's option, the provision of technical assistance and dedicated tools.

In the case of central tubes, the parties will also transfer their supply contract with Alcatel Space, and in the case of antenna reflectors, the parties will waive their rights under the long-term supply agreement between AML and Alcatel Space.

"This operation is an important attempt to restructure the European aeronautic and defence industry," European competition commissioner Mario Monti said.

EADS, said the commission statement, "will be active in commercial aircraft, telecommunication equipment, commercial and military helicopters, space, guided weapons, drones or unmanned air vehicles used for military operations, military aircraft and defence electronics."

The new company, to be headquartered in the Netherlands, will also be active at the prime contractor level in the building of large commercial aircraft, "since it will combine 80 percent of the shares in the European aircraft consortium Airbus," said the statement.

"However, at the prime contractor level the operation will not affect the conditions of competition, since BAE Systems, which owns the remaining 20 percent in Airbus, maintains its veto rights vis-a-vis all strategic decisions at the European consortium, and since the proposed transaction has no impact on the work-share distribution between Airbus partners," it said.

"There is no indication that the operation would create a dominant position on the upstream equipment markets," said the statement.

EADS' other stakes will include 62.5 percent of the Eurofighter programme, 100 percent of the Eurocopter programme, 75.5 percent of the European satellite firm Astrium, 45.8 percent of Dassault Aviation and 26.6 percent of Arianespace.

DASA

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