WASHINGTON (CNN) - The Justice Department on Wednesday approved the proposed Whirlpool acquisition of Maytag in a merger of home appliance makers.

"After thoroughly investigating Whirlpool's proposed acquisition of Maytag, the (Antitrust) Division determined that the proposed transaction is not likely to reduce competition substantially," the Justice Department said in a written statement.

After an investigation that lasted about six months, the Justice Department said it would not oppose the planned $1.7 billion deal, Reuters reported Wednesday.

Shares of both appliance makers shot up to new year highs on the news. Maytag (Research) surged 28 percent, or $4.73, to $21.81, above Whirlpool's offering price of $21 a share. Whirlpool (Research) shares rose $6.38, or 7.1 percent, to $95.95, an all-time high.

"The combination of strong rival suppliers with the ability to expand sales significantly and large cost savings and other efficiencies that Whirlpool appears likely to achieve indicates that this transaction is not likely to harm consumer welfare," the department's antitrust division said in a statement, according to Reuters.

The proposed deal would form the world's largest appliance maker and give the combined company a large share of the U.S. market for washing machines and dryers. It had run into opposition from staff lawyers in the antitrust division, according to a knowledgeable source.

Critics said the combination would give Whirlpool control of up to 70 percent of the market for washing machines and dryers. Justice Department lawyers had sought sworn statements from competitors and retailers about how the combination of the companies would affect competition.

The government told Reuters the largest appliance retailers, which include Sears Holdings Corp. (Research) , Lowe's Cos. (Research) , Home Depot Inc. (Research) and Best Buy Co. (Research), "have alternatives available to help them resist an attempt by the merged entity to raise prices." Additionally, Whirlpool also "substantiated large cost savings and other efficiencies that should benefit consumers."

The combination will unite some of the best-known names in appliances, joining Whirlpool's KitchenAid, Roper and Consul brands with Maytag's Hoover vacuums and Jenn-Air, Amana and Magic Chef products.

"It's pretty exciting," David MacGregor, an analyst with Longbow Research who surveys the appliance industry told Reuters. "I think the Maytag brand will be back up on its feet in no time." He said the next step would be for Whirlpool to articulate a strategy for positioning the two companies' vast brands.

--from CNN and wire reports

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