EU Launches New Anti-Subsidy Probe Into UAE Telecoms Company

This marks the EU's first-ever probe into a non-Chinese entity.

The European Union (EU) has launched an anti-subsidy probe into an Emirati telecoms company, marking the first such action under new regulations targeting foreign acquisitions of EU assets.

This move reflects Brussels' increased vigilance over foreign investment within the bloc, particularly concerning potential threats from countries like China and the United States.

First-Ever Probe of EU Into a Non-Chinese Entity

The investigation represents the first instance of such scrutiny being directed at a non-Chinese entity under the EU's updated regulations. The probe focuses on e&, a telecoms group mainly owned by the government of the United Arab Emirates (UAE).

In August 2023, e& entered into a 2.15-billion-euro agreement to acquire Czech PPF telecoms group assets in Hungary, Serbia, Bulgaria, and Slovakia.

According to the European Commission's press release, the decision to launch the probe stemmed from preliminary findings alleging that e& may have benefited from foreign subsidies, thus distorting the bloc's internal market.

The alleged subsidies include an unlimited guarantee from the UAE and a loan from UAE-controlled banks, which facilitated the acquisition. The Commission views such subsidies as potentially disruptive to the internal market, especially if they give e& an unfair advantage in financing its activities within the EU.

Throughout the investigation, the Commission seeks to determine whether the foreign subsidies impacted the acquisition process and if they pose a threat to competition within the EU market.

The probe will evaluate whether these subsidies unfairly benefited e&, allowing it to outbid competitors or change the competitive landscape. The transaction was brought to the Commission's attention in April 2024, prompting the extensive investigation, which is slated to conclude by October 15.

The Commission will decide based on a comprehensive assessment of how these subsidies may have influenced the acquisition process and the EU market.

EU Launches New Anti-Subsidy Probe Into UAE Telecoms Company
The European Union (EU) has launched an anti-subsidy probe into an Emirati telecoms company. JOSEP LAGO/AFP via Getty Images

EU's Foreign Subsidies Regulation

e& is a state-controlled telecom operator offering services like mobile phone service. On the other hand, PPF, headquartered in Czechia, operates across multiple European countries and serves a customer base of over 10 million.

The acquisition falls within the scope of the Foreign Subsidies Regulation (FSR), introduced in July 2023, to address potential distortions arising from foreign subsidies in the EU market.

Under the FSR, companies must inform the Commission of mergers if they meet specific criteria related to turnover and foreign financial contributions.

After the investigation, the Commission may consider the commitments proposed by the company, prohibit the concentration, or release a no-objection decision based on its findings.

"Today we open our first in-depth investigation into a concentration under the Foreign Subsidies Regulation - Emirates Telecommunications' acquisition of parts of PPF Telecom. The FSR allows us to tackle distortive support from third countries for the acquisition of businesses in the EU," Margrethe Vestager, Executive Vice-President in charge of competition policy, said in the press release.

"Our investigation will also assess whether e& may have received foreign subsidies that could distort fair competition in the telecom sector," she added.

Byline
Byline


ⓒ 2024 TECHTIMES.com All rights reserved. Do not reproduce without permission.
Join the Discussion
Real Time Analytics