The European Union approved the acquisition of Novartis AG's (NVS) Animal Health business by U.S. pharmaceutical company Eli Lilly and Co. (LLY), after its investigation confirmed the transaction wouldn't harm competition in the bloc.

The European commission, the EU's executive arm, said Friday the sale of Novartis's Animal Health business to Eli Lily would create an overlap between the activities of the two companies, which are focused on the markets for animal health products. However, it wouldn't harm competition in the sector, "because a number of strong players would remain in the markets after the merger."

The commission's investigation focused on markets for animal health products in several EU countries such as Belgium, France and Greece and found that "competitors will remain active after the merger and could become a competitive constraint to the merged entity," it said.

The transaction was notified to the commission on August 29.

Write to Viktoria Dendrinou at Viktoria.Dendriou@wsj.com

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