Italian antitrust regulator conditionally approved Sky Italia Srl's proposed acquisition of Mediaset SpA's digital terrestrial pay TV platform R2 Srl, Reuters reported May 22.

The regulator cleared the deal on the condition that the Sky PLC unit would be prohibited from offering exclusive content on its video streaming platform for three years. It said the "partial return" of the pay TV assets to Mediaset was not enough to create fair market conditions for web rivals.

The antitrust watchdog also raised concerns that the transaction could boost Sky's dominant positions in the Italian pay TV and wholesale pay TV distribution markets.

Sky Italia will move to appeal the regulator's decision, according to Reuters. The operator and Mediaset previously agreed to partially cancel their deal, thinking it would not secure unconditional approval.

The transaction is part of a wider content deal that allowed Sky Italia subscribers to access Mediaset Premium SpA's Cinema and Series channels.

Mediaset is reportedly considering stopping the operations of its digital pay TV channels and moving the content to a video streaming service.