"The Commission found that strong competitors are present for each of these products and customers would be able to continue sourcing their needs from a sufficient number of alternative vendors," the EU executive said in a statement.
The, will help the combined group build scale and address fierce price competition for flash memory products, fitted in mobile phones, MP3 players and digital cameras.
The transaction will also enable the two chipmakers to offload businesses that weighed on their profit margins.
Under the terms of the transaction, STMicro, Europe's leading chipmaker, will sell its flash memory assets to the newly formed company. Intel, the world's top semiconductor group, will sell itsassets and resources.
In exchange, Intel will get a 45.1 percent stake and a $432 million cash payment, while STMicro receives a 48.6 percent holding and $468 million in cash.
Francisco Partners plans to invest $150 million in cash for convertible preferred stock representing a 6.3 percent stake in the venture, subject to adjustments in certain circumstances.
STMicro, a Franco-Italian group, has moved much of its manufacturing to Asia over the past three years to lower costs.
Intel has already turned over its unit that makes
NAND flash, which can retain data after power is shut off, is widely used in digital cameras, photo-snapping phones and portable music players such as Apple's iPod.
NOR is used to store software programs in phones and other electronics.