BRUSSELS (MarketWatch) — The European Commission said Tuesday it has cleared U.S. car dealer Penske Corp. and General Motors Corp. to take joint control of Italian diesel engine maker VM Motori SpA.

The deal, announced by the companies in July, entails GM’s purchase of a 50% stake in the Italian engine maker from Penske. The companies didn’t disclose the financial terms of the deal.

The Detroit-based automaker plans to develop a diesel engine with VM Motori for the Cadillac CTS model in Europe in 2009.