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America Online


received approval Thursday from the

Federal Trade Commission

for its $109 billion

acquisition of

Time Warner



The commission voted 5-0 in favor of allowing the merger to go forward.

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AOL, Time Warner and the Road Ahead

The decision to allow the merger follows two separate delays by the FTC, which raised concerns that the merged conglomerate would monopolize Internet service and media content. AOL, Dulles, Va., is the world's largest Internet service provider with 26 million subscribers for its flagship service and another 2.8 million for its


service, while Time Warner, New York, owns the second-largest group of cable systems in the U.S., behind


(T) - Get Free Report


AOL's and Time Warner's rivals including


(DIS) - Get Free Report

and Internet service providers have lodged a variety of complaints about the proposed deal over the past year, several of which have been addressed by regulatory agencies in their review of the transaction. Among other issues, critics of the deal have argued that AOL Time Warner would discriminate against ISPs that want access to the company's high-speed data connections to the home, would thwart rivals in the nascent market of interactive television, would unfairly use its market power to cement its domination of the instant-messaging market, and would deny access to its content to users of other ISPs. AOL and Time Warner have dismissed these accusations and made various pledges not to engage in anticompetitive behavior.

Federal regulators have said they would require Time Warner to provide open access to its cable system to two or more competing Internet service providers, as well as abide by a series of provisions to protect competition in Web access. Time Warner recently struck a deal with



that will allow the AOL rival to offer an alternative Internet service through AOL Time Warner's cable systems.

AOL's deal with Time Warner has lost almost a third of its value because AOL's stock price has dropped 47% since its 52-week high of $92.62. Shares of AOL were recently trading up $1.30, or 2.7%, to $49.75, while Time Warner rose $1.56, or 2.2%, to $74.16.

With the FTC consent to the deal, a review from the

Federal Communications Commission

will be the next hurdle. It must determine whether the transfer of Time Warner's broadcast licenses to AOL is in the public interest. But now that the FTC has approved the deal, the completion of the FCC's review of the deal isn't expected to be as grueling a process.