European competition regulators today gave approval for German state-owned rail operator Deutsche Bahn to acquire British company Arriva for €1.8 billion.

The European Commission approval "is conditional upon Deutsche Bahn's commitment to divest Arriva Deutschland which includes the entire rail and bus business of Arriva in Germany," a statement said.

"In the light of the commitments, the commission concluded that the transaction would not significantly impede effective competition" across Europe, it underlined.

"This decision shows that the commission is open for cross-border integration in the newly liberalised transport markets, provided that such transactions do not in any way reduce competition," said competition commissioner Joaquin Almunia.

Deutsche Bahn has operations in 150 countries and employs about 240,000 people, three-quarters of whom are based in Germany. Revenues last year were 29.3 billion euros.

Arriva, based in the north-eastern English city of Sunderland, operates both train and bus services in Britain, employing more than 40,000 people.

It has activities in 11 other countries and turned over 3.15 billion pounds in 2009.

Arriva heads a consortium which has been selected as the preferred bidder to operate the bus service in Malta.