European Union regulators Tuesday approved Chinese car maker Geely to buy Sweden's Volvo Cars.

The European Commission said it sees no antitrust problems with Zhejiang Geely Holding Co's US$1.8 billion acquisition of Volvo Cars from Ford Motor Co because the takeover won't give either company the power to damage rivals.

Geely sells hardly any cars in Europe and Volvo only has "very limited" operations as a car parts supplier, it said.

Geely's acquisition of Volvo from Ford Motor Co. has been heralded as a breakthrough deal for China's auto industry, giving one of its most ambitious auto makers a well-known, prestigious global brand and access to top-tier technology.

The deal could give Geely a critical edge in China, which is the world's biggest auto market and one in which foreign brands often dominate. It will also gain its first major foothold in Europe.

Geely is a privately-run company that has gradually built its business selling cars, motorcycles and scooters.

It teamed up with the Chinese state-owned investment firm Daqing to buy Volvo. It says it will spend an extra US$900 million to expand production and make Volvo profitable again.

The EU's executive said yesterday's approval would not affect any decision it could make on European state subsidies for Volvo.

The car maker received state guarantees from Sweden last year to help it secure 500 million euros from an EU government-backed bank. The money was earmarked to develop fuel-efficient cars.

Ford has been trying to sell Volvo since late 2008 to focus on its core brands.