Telecoms: An Emirati Operator Complies with EU Rules on Foreign Subsidies

Brussels authorized on Tuesday, September 24, the acquisition of a Czech telecom operator by an Emirati group, requiring the latter not to use public subsidies from Abu Dhabi to distort competition within the European Union.

This acquisition was notified to the European Commission, the EU's competition watchdog, on April 26, and an investigation was opened on June 10.

The Commission was examining whether the acquisition of PPF Telecom by Emirates Telecommunications (e&) had been favored by state aid. After its investigations, it concluded that the assistance e& received, in the form of loans, subsidies, and unlimited guarantees from the United Arab Emirates, had not distorted the acquisition process.

However, fearing competitive distortions in the European market following the acquisition, the Commission demanded and obtained concessions.

The Emirati group notably agreed to give up the unlimited state guarantees. Additionally, it will be prohibited from financing PPF’s activities in the EU, except in the case of certain emergency funding that must be reviewed by Brussels. The group will also be required to inform the Commission of any new acquisition, regardless of the size of the target.

"Today’s decision marks a positive outcome to this process, thanks to the cooperation of the parties and their willingness to offer a comprehensive set of remedies to address our concerns," said Margrethe Vestager, the EU's Competition Commissioner, in a statement.

In recent years, the EU has equipped itself with new tools to curb unfair practices by foreign actors.

A law that came into force in mid-2023 specifically aims to prevent state-subsidized companies from distorting competition within the EU. It allows for monitoring mergers and acquisitions over 500 million euros and public tenders exceeding 250 million euros.

By using this instrument, Brussels pushed two Chinese companies in May to withdraw from a public tender for a photovoltaic park in Romania.

The investigation concluded on Tuesday was the first concerning a merger under this new tool.

Source:AFP