News: NEC UPDATE 1-Australian regulator approves Nine's buyout of Fairfax

(Adds deal and media industry background)

Nov 8 (Reuters) - Australia's competition watchdog said on Thursday it will not oppose Nine Entertainment Co Holding's (NEC) A$2.16 billion ($1.6 billion) buyout of newspaper publisher Fairfax Media Ltd (FXJ) , paving the way for one of the country's biggest media shake-ups.

Competition and Consumer Competition (ACCC) Chairman Rod Sims said the deal announced in July would not substantially lessen competition.

Australian media companies have been struggling to compete for advertising revenue with the rise of foreign online behemoths like Facebook FB.O and Google GOOGL.O , prompting the government to relax cross-ownership restrictions last year.

The deal would make Nine the biggest media company in Australia ahead of News Corp's NWSA.O Australian arm, and mark the end of an era for Fairfax.

The 177-year-old publisher of the Sydney Morning Herald and Australian Financial Review will give up the name of founder John Fairfax under the arrangement with the free-to-air broadcaster.

The deal is subject to Fairfax shareholder approval at a scheduled meeting on Nov. 19 and a final court approval at the end of the same month.

The ACCC said Thursday's decision was "not indicative" of how it may treat any future proposed media mergers or acquisitions, amid expectations of more such activity in response to the relaxation of ownership laws.

($1 = 1.3749 Australian dollars)