The European Commission has launched a thorough investigation into UAE-based telecom company e&’s acquisition of PPF Group’s telecom operations in Eastern Europe. This move excludes PPF Telecom’s Czech business.
The investigation, conducted under the Foreign Subsidies Regulation, will scrutinize whether e& received foreign subsidies that might distort the EU internal market. The Commission has expressed preliminary concerns about potential distortions caused by an unlimited guarantee from the UAE and a loan from UAE-controlled banks, which facilitated the acquisition.
The Commission’s statement highlights concerns that such subsidies may have enhanced e&’s ability to finance the acquisition and could give the merged entity a competitive edge in the EU. This advantage might come from being able to finance its operations under more favorable conditions.
The aim of the investigation is to determine if these subsidies negatively impact the internal market by affecting the acquisition process and the activities of the merged entity. The Commission will assess whether the financial support allowed e& to outbid competitors or even made the acquisition feasible in the first place.
Introduced in July 2023, the Foreign Subsidies Regulation empowers the EU to address market distortions caused by foreign subsidies. This ensures a level playing field for all companies operating within the internal market while remaining open to trade and investment.
Companies must notify the Commission of mergers if one of the entities involved generates at least €500 million in EU turnover and has received over €50 million in foreign financial contributions in the past three years. The e& deal, announced in August 2023 and valued at up to €2.5 billion, involves acquiring a 50% plus one share stake in PPF Telecom’s assets in Bulgaria, Hungary, Serbia, and Slovakia, including the Yettel operations and infrastructure businesses.
The Commission has until October 15, 2024, to conclude its investigation. It emphasized that initiating an in-depth probe does not determine the final outcome.
