Brussels (The Brussels Morning Newspaper) – The EU Commission conditionally approved the acquisition of parts of PPF Telecom by e&, under the Foreign Subsidies Regulation.
The European Commission has agreed, under the Foreign Subsidies Regulation (‘FSR’), the acquisition by Emirates Telecommunications Group Company PJSC (‘e&’) of sole control of PPF Telecom Group B.V. (‘PPF’), excluding its Czech business, subject to prerequisites. The approval is dependent on full compliance with the commitments offered by the parties.
According to the EU Commission, this decision follows an in-depth investigation of the proposed acquisition. e& is a telecommunications operator located in the United Arab Emirates (‘UAE’) controlled by a sovereign wealth fund owned by the UAE, the Emirates Investment Authority (‘EIA’). PPF, located in the Netherlands, is a telecommunication operator in Czechia, Bulgaria, Hungary, Serbia (Yettel) and Slovakia (O2). Those activities include telecom firms and the underlying infrastructure. In total, PPF has more than 10 million customers in that sector.
What foreign subsidies did e& receive from the UAE?
During its in-depth examination, the European Commission found that e& and EIA obtained foreign subsidies from the UAE, consisting notably in an unlimited State guarantee to e&, as well as assistance, loans and other debt instruments to EIA. The foreign subsidies acquired by e& and the EIA could have led to a contortion of competition in the EU internal market post-transaction.
What commitments did e& and EIA make to the EU?
To address the EU Commission’s concerns, e& and EIA presented a commitments package consisting of commitments that e&’s articles of association do not differ from ordinary UAE bankruptcy law, thereby releasing the unlimited State guarantee. Banning of any financing from the EIA and e& to PPF’s actions in the EU internal market, subject to certain peculiarities concerning non-EU activities and “emergency funding”, which will be subject to inspection by the Commission, as well as the condition that other transactions between those companies take place at market terms.
The Commission discovered that those commitments will terminate the existence of the unlimited guarantee to e&; ensure that e& and the EIA cannot conduct foreign subsidies to the activities of the combined entity in the internal market after the transaction, and deliver the Commission with proper monitoring mechanisms in particular areas of risk. The Commission therefore deduced that the transaction, as modified by the responsibilities, would no longer raise competition situations.
