European Commission gives green light to acquisition of e& in Europe

e& has committed to implementing a number of measures to address the concerns raised by the European body

The European Commission has granted conditional authorization to the United Arab Emirates (UAE) telecommunications company to acquire exclusive control of the PPF Telecom Group, excluding its Czech operations, under the Foreign Subsidies Regulation (FSR) , indicated the European organization in a press release.

This approval is conditional on companies complying with specific commitments intended to mitigate competition concerns, the commission said.

The move follows an in-depth investigation by the commission, which found 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 aid that could distort competition within the EU internal market.

During the investigation, the European Commission assessed whether these subsidies influenced the acquisition process or whether they could lead to anti-competitive behavior after the transaction. The commission found that even if the subsidies did not change the outcome of the acquisition, 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 such as 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 have proposed a set of commitments including:

-Amend e&’s statutes to align with standard UAE Bankruptcy Law, thereby eliminating the unlimited state guarantee.

– Restrict EIA and e& funding to PPF activities in the EU, with limited exceptions,

-Ensure that future E& acquisitions that do not meet the FSR reporting thresholds are reported to the commission.

The European Commission agreed that these measures would prevent the abuse of subsidies in the EU market and ensure a level playing field. She adds that an independent agent will ensure compliance with these commitments, set for a period of 10 years, with the possibility of extension.

The Commission’s approval is conditional on full compliance with these commitments, ensuring that the operation will not lead to competitive imbalances in the EU.

“We found that e& benefited from subsidies from the UAE which would give the merged entity an unfair advantage and could distort fair competition in the telecommunications sector. Today’s decision marks a positive outcome to this proceeding, thanks to the cooperation of the parties and their willingness to propose a comprehensive set of solutions to address our concerns,” said Margrethe Vestager, Executive Vice President of the European Commission in charge of competition policy.

Earlier this year, e& signed a deal to acquire a significant stake in PPF Group’s telecommunications assets in Eastern Europe, as part of the telco’s strategy to expand beyond its domestic market.

Under the terms of the agreement, e& will acquire a 50% stake plus one share in PPF Telecom’s operations in Bulgaria, Hungary, Serbia and Slovakia.

The agreement excludes PPF’s assets in the Czech Republic, including O2 Czech Republic and CETIN, which will remain under the full control of PPF.

Hatem Dowidar, CEO of e& Group, highlighted that this partnership aligns with e&’s ambition to become a global technology group, enhancing customer offerings and expanding its presence in Central and Eastern Europe.