BRUSSELS, Jan 24, 2008 (AFP) - The EU's competition watchdog on Thursday gave the go-ahead to a bid by US computer giant IBM to buy Canadian business-intelligence software firm Cognos.

The European Commission decided that the deal 'would not significantly impede effective competition in the European Economic Area.'

IBM has offered five billion dollars in cash in a friendly takeover which is expected to be finalised this quarter.

The European Commission said in a statement that it considered the overlap between the parties' activities 'would not give rise to competition concerns, since the parties' combined market share would be moderate' at a European level.

IBM, which in recent years sold its personal computer division and has moved further into services and software, would strengthen its hand in business-management software with Cognos.

Cognos, an independent provider of business analytics software, has some 4,000 employees worldwide and serves more than 25,000 customers.

IBM and Cognos have partnered for more than 15 years for clients including the New York City Police Department, Canadian Tire, MetLife, and Bayer UK.

The acquisition supports IBM's 'information on demand' strategy that includes data management and business consulting services for companies.

The business intelligence service helps companies gather information for strategic decision-making.