* EU does not see acquisition impeding competition
* Merged entity to face competition from British Telecom
* Tiscali shareholders clear capital increases
(Adds Tiscali capital increase approval last two paras)
BRUSSELS, June 30 (Reuters) - British telecoms and retail group Carphone Warehouse Group Plc CPW.L received approval from European Union antitrust authorities on Tuesday for its 236 million pound ($388 million) takeover of Internet service provider Tiscali UK.
The European Commission, executive arm of the 27-nation European Union, said in a statement that the transaction would not impede competition.
It said that though Carphone Warehouse and Tiscali UK, a unit of Italy's Tiscali SpA (TIS.MI), overlapped in retail and wholesale Internet access provision as well as other services, the new entity would face competition from other strong players, especially BT Group Plc (BT.L).
"The Commission's examination of the proposed transaction showed that none of the above markets would give rise to competition concerns," the EU executive said.
The acquisition will make Carphone the biggest residential broadband provider in Britain, with 4.25 million users. It expects an immediate 10 percent boost to its earnings per share for its fiscal year to March 2010 following the takeover.
Carphone will fund the Tiscali UK buy, which excludes debt, from its existing facilities.
Tiscali has said it will use proceeds from the sale to restructure its debt.
Separately, Tiscali said its shareholders had approved a series of capital increases and a 1-for-10 reverse share split.
The capital increases comprise one for 190 million euros in shares with free warrants, a second increase for 46.5 million euros in shares, and scope for the board to issue share capital for a further 25 million euros.
(Reporting by Bate Felix and by Nigel Tutt in Milan; Editing by Dale Hudson)