Fox initiated its $14.3-billion takeover bid last December, reviving an effort to buy up the remaining 39% of the company that it does not already own.
Six years ago, Rupert Murdoch's bid to buy the outstanding shares in Sky was scuppered after journalists at the now-defunct News of the World newspaper faced allegations of phone hacking.
21st Century Fox's proposed £11bn takeover of Sky "would raise no competition concerns" according to European Commission competition authorities.
Murdoch-controlled Fox already owns 39 percent of Sky, a broadcasting and broadband company with operations throughout Europe, including Austria, Germany, Ireland, Italy and the United Kingdom.
"Based on the results of its market investigation, the commission concluded that the proposed transaction would raise no competition concerns".
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21st Century Fox said it welcomed the EC's decision.
Ofcom is due to report back to Karen Bradley, the culture secretary, with the outcome of its investigation by 16 May. "They compete with each other only to a limited extent, mainly in the acquisition of TV content and in the wholesale supply of basic pay-TV channels".
The EU unconditionally cleared a News Corp. takeover of Sky in 2010, which was later abandoned in an outcry over revelations of News Corp. phone hacking.
The UK authorities' final verdict is expected in May, however in the meantime the Commission has made it clear that officials will not seek to block the deal at a European level.
The Commission, which polices the EU's anti-trust cases, said its finding was based exclusively on an assessment of the market impact of the deal, not on the issue of plurality in media ownership which is the focus of the British probe. Murdoch will get his prize.