The European Commission has conditionally approved UAE’s ecommerce giant e& to acquire control of PPF Telecom Group, excluding its Czech operations. This decision invokes the Foreign Subsidies Regulation (FSR) to ensure fair competition within the European Union market.
The investigation revealed that e&, an entity controlled by the Emirates Investment Authority (EIA), had substantial subsidies from the UAE government. These included an unlimited state guarantee and significant financial aids, which posed concerns about competitive fairness. While these subsidies didn’t alter the acquisition outcome, they could lead to anti-competitive behaviors, enabling the merged entity to pursue riskier investments.
Margrethe Vestager, EVP of the European Commission in charge of competition policy, stated, “We found that e& benefited from subsidies from the United Arab Emirates that would give the merged entity an unfair advantage and could distort fair competition in the telecom sector. Today’s decision marks a positive outcome to these proceedings, thanks to the party’s cooperation and willingness to offer a comprehensive set of remedies to address our concerns.”
Earlier this year, e& had signed an agreement to acquire significant stakes in PPF Group’s telecom assets across Eastern Europe. This expansion aligns with e&’s goal to grow beyond its domestic market. According to the deal, e& will acquire a 50% stake plus one share in PPF Telecom’s operations in Bulgaria, Hungary, Serbia, and Slovakia. Notably, PPF’s Czech Republic assets, including O2 Czech Republic and CETIN, will remain under PPF’s control.
e& Group CEO Hatem Dowidar emphasized that this partnership aligns with e&’s ambition to evolve into a global tech group, enhancing customer offerings and expanding its geographical footprint.
This development underscores the importance of regulatory oversight in maintaining competitive markets, particularly when foreign subsidies are involved. The European Commission’s decision represents a balanced approach to fostering fair competition while enabling business growth within the EU.
