PARIS (Reuters) - The European Commission would not vet any tie-up between the telecoms businesses of Orange (>> ORANGE SA) and Bougyues (>> BOUYGUES), leaving the issue to the competition authority in France where they generate most of their revenue, according to three sources close to the matter.

"There's no doubt about it any more," one source with direct knowledge of the matter said.

A competition review would be a crucial part of the process, as Orange, which is in talks to buy Bouygues Telecom for about 10 billion euros (7.66 billion pound) in cash and shares, is the largest telecoms company in France.

It would be the first case in Europe of the leading telecoms operator in a domestic market buying a smaller rival.

Under current European Union regulation, the European Commission would become involved if the telecoms firm generated less than two-thirds of its EU turnover in France.

After approval by Britain's Competition and Markets Authority of the sale of Orange's stake in UK-based EE to BT (>> BT Group plc) last week, Orange has seen that balance change in favour of the French competition authority, according to the three sources.

Spokespeople for Orange, Bouygues and the French competition authority declined to comment.

Some telecoms analysts, bankers and lawyers noted that a screening of the deal by the French competition authority would increase its chances of a green light since they expect it to ask for milder remedies than the EU authorities and its Competition Commissioner Margrethe Vestager.

However, Bruno Lasserre, the president of the French competition authority, said that the competition rules and procedures applied in France were the same as the ones applied by the EU Commission.

"If there's a deal, it will unavoidably be subject to an in-depth examination," he said on Tuesday in Paris on the sidelines of a conference held by the French telecoms regulator.

Orange has already started informal talks with rivals Numericable-SFR (>> Numericable Group) and Iliad (>> ILIAD) on possible asset sales to satisfy competition concerns, sources said last week.

(Reporting by Mathieu Rosemain, Gwenaelle Barzic, Matthieu Protard and Philip Blenkinsop; Editing by Keith Weir)

By Mathieu Rosemain and Gwénaëlle Barzic

Stocks treated in this article : BOUYGUES, ORANGE SA, ILIAD, BT Group plc, Numericable Group