EC TO APPROVE AOLTW

The European Commission will on Wednesday (10/11) give conditional clearance to America Online's multi-billion dollar acquisition of Time Warner, an EU source said Monday (10/9).

"It will be cleared on Wednesday with a few conditions," the source told Reuters.

But the deal still faces major regulatory hurdles in the United States. Europe's acquiescence does not signal the Americans are likely to follow suit quickly, observers said.

According to industry sources, the companies last month offered a series of concessions to the commission, the competition watchdog for the 15-nation European Union, to win its blessing for the merger.

Under these proposals, Germany's Bertelsmann would "progressively exit" from AOL Europe, currently a 50/50 joint venture, cutting a potential link between Warner's music interests and BMG.

AOL will take similar measures to change the structure of its AOL France unit, currently jointly controlled with Vivendi, which itself faces a commission probe into its planned merger with Seagram.

Time Warner has also said it will not discriminate against non-AOL affiliated Internet service providers for the provision of online music for five years, making its music available on other Internet systems. It will also make its music compatible with at least three software music players not owned or controlled by it or AOL.

AOL has also committed for three years not to force content providers wanting to sign a deal with AOL in the United States to sign an exclusive deal in Europe, the sources said.

AOL and Time Warner both declined to comment on their negotiations with the commission.

The commission, in theory, has until Oct. 24 to reach a verdict on the AOL-Time Warner deal, but it is normal for it to announce a decision a couple of weeks before the deadline.

The ruling would come just one week after WMG abandoned a separate, yet related, joint venture deal with EMI.