[DigitalToday reporter Jinju Hong (홍진주)] The European Union (EU) has conditionally approved Paramount’s takeover of Warner Bros Discovery.

On July 22 local time, IT outlet Engadget reported that as a condition of approval, Paramount must unwind its joint distribution business relationship with Universal in Europe.

In its review, the European Commission examined the impact across film production and distribution, media licensing and broadcasting. It concluded that the biggest concern over reduced competition was Paramount’s future distribution business. Paramount and Universal operate a joint distributor in Europe called Universal International Pictures (UIP). The Commission said adding Warner’s film portfolio could increase market dominance.

The Commission said that if the deal went ahead, Warner films would have been distributed through Universal International Pictures. Without remedies, it said less favorable rental and distribution terms would have been applied to cinema operators and the harm would ultimately have fallen on consumers.

Paramount will withdraw from the joint distribution business within 13 months of closing. It also pledged not to cooperate directly or indirectly with Universal on joint film distribution for 10 years. The EU approved the takeover on these conditions.

The decision secures EU and U.S. federal-level approvals for Paramount. The deal is not fully concluded. In the United States, 12 states have filed a lawsuit to block the takeover on competition concerns. A court on July 20 temporarily suspended the acquisition process for two weeks and is set to hold a hearing on Aug. 3 to decide whether a full trial is needed.

A review by Britain’s regulator also remains. The regulator has indicated an intention to intervene in the transaction. Paramount has cleared a major hurdle with European approval, but must still pass follow-up procedures in the United States and Britain.

The timetable is also a burden. Bloomberg reported that if the acquisition is not closed by the end of September, Paramount will have to pay an additional about $7 million each day thereafter. Cost pressure could rise if the U.S. lawsuit or the UK review drags on.

The deal is valued at $111 billion. European regulators’ main concern was not the merger itself but the existing cooperation structure between Paramount and Universal in Europe’s film distribution network. As a result, the remaining procedures are likely to focus on how the deal affects competition in the distribution market, along with the effects of combining content.