The commission said it did not expect the deal to have a major impact on customers buying package holidays.
If the merger gets the final go ahead it will create the UK’s largest travel agent group.
The Competition Commission will release its final report on 16 August.
Thomas Cook has 780 stores while the Co-op has 360, though the two firms plan to maintain their separate branding.
Thomas Cook will continue to run its tour operator business separately from the joint venture.
The deal also includes the Midlands Co-operative Society, which has a further 100 stores.
Thomas Cook’s shares plunged nearly 30 per cent last week after its third profit warning this year.
The group announced it would review its UK operations after its business was hit by political unrest in the Middle East and north Africa, and the difficulty of passing on cost increases to budget-conscious UK travellers.
Its French business was particularly badly hit by the fallout from the unrest in the region.
It said it would hold off making any decisions on shop closures until the Competition Commission announced a decision on its Co-op merger, which some had expected last week.
Chief executive Manny Fontenla-Novoa welcomed the commission’s decision as “great news”, adding that “this merger is just one part of the plan to strengthen our UK business”.
The commission said UK customers would not be adversely affected by the Co-op merger.