BRUSSELS, Oct 23: French energy group Suez is set to get EU regulators' backing for its takeover of Gaz de France, according to a source, raising the prospect that a key obstacle to the controversial deal would be removed.

The two companies have satisfied the European Commission's concerns about the deal's impact on competition after they promised to sell off some prime assets, a source close to the matter said on Monday.

Brussels' blessing brings the two firms one step closer to marriage, which has been threatened by opposition from unions, some political parties and rebellious shareholders not to mention jealous foreign suitors angry at being left out.

The European Union's executive arm is due to give its formal approval at a November 14 meeting in Strasbourg, although it could come earlier as the commission often rules earlier in cases, such as this one, that are subject to an in-depth antitrust probe.Although the source, speaking on condition of anonymity, said that EU Competition Commissioner Neelie Kroes was satisfied with concessions by the companies, they will have to pay a high price for her approval.

The two companies have promised Kroes that they would sell off some businesses in Belgium, where both of the companies have big operations and would have considerable market power if they merged as they are today.

After a detailed investigation into the deal, the commission voiced concerns at the end of August about the takeover's potential impact on competition in the Belgian electricity and gas markets.

In response, the two groups proposed that Gaz de France would sell its 25.5 per cent stake in the Belgian electricity company SPE, which is the main competitor of Suez subsidiary Electrabel.

Meanwhile, Suez would sell its stake in another Belgian subsidiary Distrigaz, although the new group would retain long-term contracts to supply Electrabel.

Although the EU threat to the takeover -- which could have fatally blocked the deal -- appears to have been lifted, major hurdles remain.

From the start the takeover was fraught with risks, especially because it was widely seen as being orchestrated by the French government to keep Italian energy group Enel from buying Suez.

The French government announced plans to merge state-controlled GDF with

Suez in February, sparking a hail of criticism from Italy because Enel, had recently expressed interest in Suez.

While Rome was in revolt at the perceived French protectionism, the deal also raised eye brows in Brussels, which has complained in the past that the EU energy market is too concentrated in the hands of a few national giants and had previously called for more cross-border mergers.

But even in France, the government has struggled to sell the merger because it requires reducing the state's stake in GDF, which is deeply unpopular with unions and the opposition.

Recently some shareholders have also protested at the terms of the takeover, judging that they are not getting a fair deal.--AFP