The European Commission, which has launched its first in-depth investigation under the European Union’s Foreign Subsidies Regulation (FSR), may require commitments to address competition concerns, setting a precedent for future FSR-related cases, McGuireWoods London partner Matthew Hall wrote in an Aug. 19, 2024, Law360 article.
The investigation concerns the proposed acquisition of PPF Telecom Group B.V. by Emirates Telecommunications Group Company PJSC (e&), a UAE state-controlled telecom operator. The FSR, effective since October 2023, enables the commission to review foreign subsidies provided by non-EU countries to companies operating within the EU, especially in large M&A and public procurement cases.
The commission’s investigation was triggered by concerns that e& received foreign subsidies from the UAE, such as an unlimited guarantee and a term loan from UAE-controlled banks, potentially distorting competition within the EU. The guarantee, linked to e&’s exemption from UAE bankruptcy law, allegedly enabled e& to secure more favorable financial terms, potentially altering the acquisition process.
The commission has until Dec. 4, 2024, to decide on the acquisition, following an extension due to e&’s commitment offer. The investigation will determine if the foreign subsidies improved e&’s competitive position in the acquisition process and future EU market activities.
“The e& case, the first in-depth investigation of an M&A deal under the FSR, assuming it is ultimately approved subject to commitments, will set a useful precedent for future cases,” wrote Hall, an antitrust lawyer and member of McGuireWoods’ Government Investigations & White Collar Litigation Department. “Of particular interest will be whether behavioral commitments are accepted by the commission and if so, of what type.”