UPDATE 1-EU clears RWE's takeover of Essent, with condition

* RWE must divest Essent's Stadtwerke Bremen

* RWE says deal to close in 3rd quarter (Adds companies' statement, time frame for closing)

BRUSSELS/FRANKFURT, June 23 (Reuters) - European Union antitrust regulators approved German utility RWE's (RWEG.DE) 8.2 billion euro ($11.4 billion) takeover of Dutch peer Essent on the condition that it sell Essent's controlling stake in a German unit.

"RWE will ... not be able to use its position as owner of certain interconnectors on the Dutch-German border to withhold electricity and thereby increase prices in the Dutch electricity markets," EU Competition Commissioner Neelie Kroes said in a statement on Tuesday.

Essent-controlled Stadtwerke Bremen AG, which RWE pledged to divest, is active in the German wholesale electricity and gas markets.

RWE said in a joint statement with Essent that it welcomed the commission's ruling. Essent said the approval confirmed that RWE and Essent complemented each other with "hardly any overlap."

RWE plans to close the deal in the third quarter, the companies said.

The German power company, Europe's fifth-largest utility, has said it will finance the Essent buy via a new 9 billion euro credit facility and existing cash balances.

On Monday, the European Union executive cleared Swedish energy group Vattenfall's takeover of the production and supply arm of Dutch utility Nuon for 10.3 billion euros after it agreed to sell Nuon's retail units in Germany.

Double click on the newslinks below for the relevant topics: [EU-REGS-RTRS-LEN] For stories on competition issues [EU-REGS-AID-BACT-RTRS-LEN] For stories on state aid, M&As (Reporting by Foo Yun Chee and Ludwig Burger; editing by John Wallace)