The European Commission said it did not see competition concerns with the deal which it said would give Italy's Fiat the ability "to exercise sole control" at Chrysler.
Fiat took the stake in return for engine and small car technology that Chrysler lacked. It can increase its holding at a later date. The U.S. government favors the deal and made new loans to Chrysler contingent on the Fiat tie-up.
EU antitrust regulators said the deal would not alter the markets for making and selling cars because the two companies have only limited rivalry. Chrysler does not make any cars in Europe, Fiat's main base, and sells few cars there.
They also saw no problems with Fiat acting as a supplier to car makers for lighting and transmissions systems because the deal would not allow the company restrict rivals' access to products that they need.