European Commission Clears First Acquisition Under EU Foreign Subsidies Regulation

By: Robert Klotz & Lucia Rama

In a widely anticipated decision, the European Commission granted conditional approval on September 24 for Emirates Telecommunications Group Company PJSC (e&) to acquire sole control of PPF Telecom Group B.V., excluding its Czech operations. This approval, issued under Regulation (EU) No 2022/2560 on foreign subsidies distorting the internal market (FSR), comes with strict commitments to safeguard fair competition within the EU single market.

This marks the first formal ruling under the new FSR, a legal framework that bridges merger control and State aid law. Effective since July 12, 2023, the FSR equips the Commission with the authority to address potential market distortions caused by foreign subsidies. It is seen as a vital tool in promoting fair competition within the EU while maintaining openness to trade and investment.

Background of the Transaction
Emirates Telecommunications Group Company PJSC (e&), formerly known as Etisalat, is a major telecommunications operator based in the United Arab Emirates (UAE), backed by the Emirates Investment Authority (EIA), a sovereign wealth fund. PPF Telecom Group B.V. (PPF) is a significant telecom provider operating in Czechia, Bulgaria, Hungary, Serbia, and Slovakia, serving more than 10 million customers across Central and Eastern Europe.

In 2023, PPF announced that e& would pay an upfront sum of €2.2 billion to acquire a controlling stake in its telecommunications assets in Bulgaria, Hungary, Serbia, and Slovakia. Additionally, e& committed to making up to €350 million in earn-out payments within three years, contingent on PPF Telecom meeting specific financial targets, potentially raising the total purchase price to €2.5 billion.

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