e& committed to implementing a number of measures to address the concerns noted by the European body
The European Commission has granted conditional approval for United Arab Emirates (UAE) telco e& to acquire sole control of PPF Telecom Group, excluding its Czech operations, under the Foreign Subsidies Regulation (FSR), the European body said in a statement.
This approval is contingent upon the companies adhering to specific commitments designed to mitigate competition concerns, the commission said.
The decision follows an in-depth investigation by the commission, which revealed that e&, controlled by the Emirates Investment Authority (EIA), had received foreign subsidies from the UAE government. These subsidies included an unlimited state guarantee, loans and other financial aids that could potentially distort competition within the EU internal market.
During the investigation, the European Commission assessed whether these subsidies influenced the acquisition process or could lead to anti-competitive behavior post-transaction. The commission found that while the subsidies did not alter the acquisition outcome, they could enable the merged entity to engage in riskier investments or acquisitions within the EU, thereby distorting competition. This could give e& an unfair advantage in areas like spectrum auctions and infrastructure deployment, compared to other market players who do not benefit from similar subsidies, the commission said.
To address these concerns, e& and the EIA offered a commitments package consisting of:
-Modifying e&’s articles of association to align with standard UAE bankruptcy law, effectively eliminating the unlimited state guarantee.
-Restricting financing from the EIA and e& to PPF’s activities in the EU, with limited exceptions,
-Ensuring that future acquisitions by e& that do not meet the FSR’s notification thresholds are reported to the commission.
The European Commission agreed that these measures would prevent the misuse of subsidies in the EU market and ensure a level playing field. It added that an independent trustee will monitor compliance with these commitments, which are set for a period of 10 years, with the possibility of an extension.
The Commission’s approval is conditional upon full adherence to these commitments, ensuring that the transaction does not result in competitive imbalances in the EU.
“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 the parties’ cooperation and willingness to offer a comprehensive set of remedies to address our concerns,” said Margrethe Vestager, EVP of the European Comimission in charge of competition policy.
Earlier this year, e& had signed an agreement to acquire a significant stake in PPF Group’s telecom assets in Eastern Europe, as part of the telco’s strategy to expand beyond its domestic market.
Under the terms of the deal, e& will acquire a 50% stake plus one share in PPF Telecom’s operations in Bulgaria, Hungary, Serbia, and Slovakia.
The deal excludes PPF’s Czech Republic assets, including O2 Czech Republic and CETIN, which will remain under PPF’s full control.
e& Group CEO Hatem Dowidar had stressed that this partnership aligns with e&’s ambition to become a global tech group, enhancing customer offerings and expanding its footprint in Central and Eastern Europe.
