Pharmaceutical firm Teva may go ahead with its €3.7 billion takeover of German generic drugmaker Ratiopharm if the companies divest products in the Netherlands and Hungary, the European Commission said on Wednesday.

"The decision is conditional upon the divestment of 15 products in the Netherlands and one in Hungary. The Commission had concerns that the parties' high combined market shares for these products, together with their overall post-merger strength in the Netherlands, could have harmed competition on these markets," the European Union's executive said.

The merger is to reinforce Teva's presence in the world's second-largest generics market. Teva, the world's largest generics drug manufacturer, will also gain a stronger market position in Spain, Italy and France through the deal, which it announced in March.

The combined company would have had revenues of $16.2 billion in 2009. Teva has said that cost savings from the acquisition are expected to amount to at least $400 million within three years of closing the deal.

Teva announced the Commission's decision on Tuesday, but provided no details.