The European Commission on Friday cleared Lite-On's takeover of Philips' CD and DVD vehicle entertainment system Automotive Playback Modules (APM). APM develops, manufactures and supplies CD and DVD playback modules.

The Commission -- the European Union's antitrust authority -- said the combined entity would continue to face "several strong and effective competitors", in the disc-making sector, as well as development and design. The Commission concluded that "there would be no risk of substantially re-enforcing the new entities' position in any of these markets and that customers would continue to have both alternative and competing sources of supply."

The manufacturing operations that will be sold are mainly located in Gyor, Hungary. However, some APM operations -- research and development, marketing and sales, and product management activities - will be transferred to a joint venture between the two companies, which will operate under the name Philips and Lite-On Digital Solutions, or PLDS.

In PLDS, Lite-On will buy out BenQ's stake and replace it as the controlling shareholder in the joint venture now operating under the name Philips and BenQ Digital Storage, or PBDS. Upon completion of this transaction, PBDS will be renamed PLDS.