The Competition Bureau approved the deal as it ruled it is unlikely to substantially lessen or prevent competition.
Commissioner of Competition John Pecman said the bureau conducted an extensive review of this merger.
"We found that advertisers and readers continue to value print newspapers, despite the growth of online sources as an alternative," Pecman said in a statement.
"However, our review concluded that there would not be significant anti-competitive effects for readers or advertisers arising from the proposed transaction."
The bureau cited a lack of a close rivalry between Postmedia's broadsheet newspapers and Sun Media's tabloid newspapers
The regulator also said the media company will want to keep readers and maintain editorial quality to attract advertisers to its newspapers, which face competition from free newspapers and digital alternatives.
Sun Media parent Quebecor Inc. (TSX:QBR.B) said Wednesday the deal with Postmedia (TSX:PNC.B, TSX:PNC.A) is now expected to close in the coming weeks.
In the meantime, Sun Media will continue to operate the newspapers.
"Quebecor appreciates the Competition Bureau's diligence throughout the review of this transaction," the company said in a statement.
Postmedia (TSX:PNC.B, TSX:PNC.A) is already has one of Canada's largest chains of daily newspapers including the National Post and dailies in Montreal, Ottawa, Calgary, Edmonton and Vancouver.
The deal, announced last year, will add 175 newspapers and publications, including the Sun chain of daily newspapers as well as the London Free Press and the 24 Hours free dailies in Toronto and Vancouver.
The sale also includes the Canoe web portal in English Canada, part of the national sales team based in Toronto, Quebecor's Islington printing plant in Ontario and 34 real estate properties in Ontario, Alberta and Manitoba.
"We look forward to soon welcoming the Sun Media brands and employees to Postmedia," Postmedia president and chief executive Paul Godfrey said.
"We are confident that our audiences and advertisers will continue to benefit from the strength of their favourite brands and that Postmedia will be poised to better compete against foreign-based digital giants that have been disrupting the Canadian media landscape at the peril of distinctive Canadian voices."
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