© Reuters. FILE PHOTO: Windows of German department store Karstadt are boarded up ahead of G20 summit in Hamburg

BERLIN (Reuters) – Germany’s antitrust regulator on Friday approved the planned merger of department store chains Kaufhof and Karstadt, owned by Canada’s Hudson’s Bay Co (HBC) (TO:) and Austria’s Signa Holding.

The deal will create a group with 243 department stores in Germany, Belgium and the Netherlands and annual sales of 5.4 billion euros ($6.13 billion).

What will become Europe’s third biggest department store chain faces stiff competition from e-commerce players such as Amazon (O:) and online fashion retailer Zalando (DE:), something the regulator noted in its decision which weighs whether merged companies would dominate their market.

“We found that Kaufhof and Karstadt have a market share of more than 25 percent in only a few categories of goods and regions… In addition, online retailers are an important alternative for a rapidly growing number of consumers in most categories of goods,” Cartel Office President Andreas Mundt said in a statement.

Several people familiar with the matter told Reuters late on Thursday that the cartel office was poised to approve the deal.

Signa will hold a 50.1 percent stake in the combined company and take the strategic lead on the business’ board.

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