The European Commission Tuesday cleared Japan's Panasonic Corp. (6752.TO) to buy its smaller rival Sanyo Electric Co. (6764.TO) in a deal worth some $9 billion.

Its decision, however, is conditional on Panasonic selling battery-making plants in some countries where the market share of the merged company would be too high.

Both companies produce electric car batteries, used for hybrid cars such as the Toyota Motor Corp.'s (7203.TO) Prius model.

The companies have felt the effects of the economic downturn as the electronic goods sector is weighed down by a relentless price war pushing down the price of televisions and other consumer gadgets.

-By Peppi Kiviniemi, Dow Jones Newswires; +32 (0)2 741 1 483; peppi.kiviniemi@dowjones.com