The European Commission has launched, for the first time, an in-depth investigation under its Foreign Subsidies Regulation (FSR), on a guarantee and a loan provided by the UAE to one of its state-owned companies Emirates Telecommunications Group Company PJSC (e&).
According to the Commission, there are sufficient indications that has benefitted from foreign subsidies in the form of “an unlimited guarantee” and “a loan from UAE-controlled banks” that directly facilitated the company’s acquisition of telecoms operator PPF Telecom Group B.V. (PPF).
The investigation now looks into whether the loan and guarantee leading to the acquisition has distorted competition in the EU internal market.
The move is watched closely by other third countries, including those that have state-owned enterprises or sovereign wealth and pension funds that are involved in mergers or acquisitions in the EU. In ASEAN, these include Singapore’s Temasek Holdings and Government Investment Cooperation (GIC), Malaysia’s Petronas and Khazanah Nasional Berhad (KNB), Indonesia Investment Authority (INA).
About the FSR
The FSR, which entered into force on 12 October 2023, enables the Commission to investigate foreign subsidies that have been granted to businesses involved in certain M&A transactions or joint ventures, public procurement procedures and other market situations, if it suspects that these might have distorted competition in the EU.
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