By Natalia Drozdiak in Brussels and Nick Kostov in Paris 

BRUSSELS--The European Union's antitrust regulator on Thursday cleared the merger of Hong Kong-based CK Hutchison Holdings Ltd. and Russia's VimpelCom Ltd.'s Italian operations, confirming a report in The Wall Street Journal.

EU antitrust chief Margrethe Vestager said. "We can approve the deal because Hutchison and VimpelCom have offered a strong remedy that enables a new mobile network operator, Iliad, to enter the Italian market."

She has taken a tough line against telecom deals in the region, particularly in cases where they reduce the number of mobile-telecom operators in a country.

The EU in March opened a full investigation into the proposed merger of 3 Italia and Wind, citing concerns that the combination would lead to increased prices and reduced choice for Italian customers.

Since then, France's Iliad SA has agreed to acquire telecom infrastructure that the merging companies will sell to secure regulatory approval, allowing the French company to create a fourth nationwide mobile network in Italy.

In a joint statement, Hutchison and VimpelCom welcomed the EU's announcement.

"This joint venture will unlock major investment in Italy's digital infrastructure, creating a telecoms company with the scale and strength to offer world-leading telecoms services with greater reliability, coverage and speed," said Canning Fok, Hutchison Group's co-managing director.

Maximo Ibarra, the current chief executive of VimpelCom's Wind, will be CEO of the combined company, according to a person close to the situation.

Iliad will buy some of Hutchison and Vimpelcom's assets, which include part of the merged company's mobile radio spectrum from different frequency bands, and get access to its mobile base station sites.

The commission said that would allow Iliad to roll out its own mobile network in Italy by providing retail mobile services and wholesale access to virtual network operators that don't own networks but piggyback off those who do.

The CEO of competitor Telecom Italia, Flavio Cattaneo, said the company was "ready on all fronts" for the arrival of Iliad in Italy. "I expect an improvement in the market," he said.

The approval is a boon for Hutchison after its planned multibillion-dollar acquisition of British mobile operator O2 was blocked by the EU in May.

The U.K. deal was blocked partly because the merged entity would have had network sharing agreements with both EE and Vodafone Group PLC, granting it access to both of the U.K.'s networks and to a full overview of its rivals' network plans. That is an issue that doesn't come into play in the Italy merger, experts have said.

Manuela Mesco in Milan contributed to this article.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com and Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

September 01, 2016 08:50 ET (12:50 GMT)