The Fair Trade Commission said Wednesday it has informed Nippon Steel Corp. and Sumitomo Metal Industries Ltd. the same day that it conditionally approves of their planned merger, paving the way for the creation of the world's second-largest steelmaker by output.

The antimonopoly watchdog, which has assessed the merger application the two firms submitted at the end of May, said they can merge on condition they take measures to prevent their domestic market share in the fields of nonoriented electrical steel sheets and high-pressure gas pipe engineering business from becoming illegally big.

Nippon Steel and Sumitomo Metal, Japan's top and third-largest steelmakers, have said they plan to sign a tieup accord in April and merge Oct. 1, with the new entity to be named Nippon Steel & Sumitomo Metal Corp.

The new company would become the world's second-largest steelmaker in crude steel production capacity, after Luxembourg's ArcelorMittal S.A.

The Japanese steelmakers also plan to submit merger applications to the competition watchdogs of around 10 countries, including China, South Korea and the United States — a process necessary for carrying out overseas operations.