PARIS/FRANKFURT, July 20 (Reuters) - The European Commission on Thursday cleared two major subsidy packages by France and Germany to support their top steelmakers - ArcelorMittal and Thyssenkrupp Steel Europe respectively - in their efforts to reduce carbon emissions.

The commission said it approved Germany's 550 million euro ($616 million) direct grant and a conditional payment mechanism of up to 1.45 billion euros to support ThyssenKrupp Steel Europe.

It also approved a 850 million euro package Paris had put in place for ArcelorMittal, Europe's largest steelmaker, highlighting Brussels' efforts to help industry on the continent decarbonise production and remain competitive with rivals.

"This will contribute to the greening of one the most polluting sectors, while helping reduce Germany's dependence on imported fossil fuels and develop the renewable hydrogen value chain in the EU," said EU antitrust chief Margrethe Vestager. ($1 = 0.8919 euros) (Reporting by Tassilo Hummel and Christoph Steitz; editing by Matthias Williams)