Fiat, through its Powertrain division, has been given EU approval to buy the 50% stake in Italian diesel engine manufacturer VM Motori currently owned by the Penske Corp. General Motors retains ownership of the other half of the company.

"The commission's examination of the proposed transaction showed that the combination of VM Motori's diesel engine manufacturing activities with those of Fiat, which are carried out by Fiat Powertrain, would lead to relatively limited horizontal overlaps which would not raise competition concerns," the commission said in a statement.

VM Motori, founded in 1947 by Claudio Vancini and Ugo Martelli - the V and M of the company's name - has had a chequered ownership since the mid-1990s when it was bought by Detroit Diesel. Penske bought a 51% stake in 2003 and then took full control in 2007 before selling a 50% stake to GM.

Fiat Powertrain Technologies, which makes engines and transmissions, was formed in 2005 after GM’s sale of its 10% stake in Fiat dissolved the engine joint venture between the two companies.