The European Commission approved the takeover by UBS of its embattled banking rival Credit Suisse on Thursday, ruling that the merger does not harm competition in Europe.

The European Commission concluded on Thursday that UBS' takeover of failed rival Credit Suisse will not affect competition in Europe, thus approving the merger request submitted earlier.

"The merger would not significantly reduce competition in the markets where their activities overlap" within the European Economic Area, the financial regulator said.

Read more: Over $68 billion withdrawn from Credit Suisse ahead of UBS takeover

On March 19, UBS agreed to acquire global investment bank Credit Suisse, Switzerland's second-largest bank, in a government-brokered deal, for over $3.3 billion after the latter's market value plummeted sharply, nearing the bank from imminent bankruptcy.

Swiss authorities granted then 109 billion Swiss francs ($118 billion) in urgent guarantee credits for the Swiss National Bank SNB, FINMA financial regulators, and UBS to acquire the crashing bank.

Both banks are considered to be global systemically important financial institutions (G-SIFIs), which made financial institutions worldwide monitor closely the dangerous situation.

But criticism arose in the country over Credit Suisse's management and how it handled the bank's finances and voiced concerns that this merger might create a megabank.

Read more: European bank shares plummet after Credit Suisse buyout

The combined bank will still face "significant competitive pressure from a wide range of competitors in all of those markets, including several major global banks as well as specialist providers and strong local players," the Commission noted.

Almost 25.2 percent of UBS' turnover is in investment banking, while the number at Credit Suisse is 20.6 percent. Both financial institutions conducted similar business ventures, including mergers and acquisition consulting. 

The takeover is likely to be completed before June's end, UBS said in April.

Swiss newspaper SonntagsZeitung said earlier that this is "the merger of the century."