BEIJING, Aug. 14 (Xinhua) -- The Ministry of Commerce (MOC) has approved plans by Wal-Mart Stores, Inc. allowing the U.S. retail giant to control China's largest online supermarket Yihaodian on restrictive conditions.

The deal will increase Wal-Mart's stake to 51.3 percent from 17.7 percent in a separate company that will own Yihaodian's online retail business, according to an MOC statement, on Tuesday.

However, the acquisition "may have an effect of excluding or restricting competition on China's value-added telecommunications service market" and can only be completed on several restrictive conditions, said the statement released by MOC's anti-monopoly bureau.

Apart from online retailing, Yihaodian also runs value-added services. The Chinese government allows up to 50 percent stake holding by foreign investors in value-added service operators in the country.

The acquired business will be limited to online retailing and the acquired company can not use its Internet platform to provide Internet services for other parties involved in the deal, the MOC said.

In addition, Wal-Mart must not engage in value-added services operated by Yihaodian through the variable interest entity (VIE) ownership structure, according to the ministry.

VIE is a common practice by foreign firms to control -- but not legally own -- companies operating in China to bypass restrictions on foreign investment in certain areas.

Wal-Mart submitted its acquisition plan to the MOC for approval in December 2011 and the examination was extended twice, according to the statement.

Founded in Shanghai in July 2008, Yihaodian sells a range of goods including food, cosmetics and consumer electronics.

The website had more than 18 million registered users as of May 2011, and its sales exceeded 800 million yuan (126 million U.S. dollars) in 2010, according to company information.