The European Commission (EC) approved UAE-based operator e&’s acquisition of European operator group PPF Telecom, after the operator committed to proposals to prevent it from gaining an unfair advantage.
In a statement, the EC detailed review that e& receives financial support from the UAE’s sovereign wealth fund the Emirates Investment Authority (EIA), but this will not “lead to actual or potential negative effects on competition in the acquisition process.”
E& was the only bidder for PPF and it had “sufficient own resources” to acquire the European operator group at market value, so “foreign subsidies did not alter the outcome” of the buyout, said the EC.
The European Union’s executive branch detailed that “unlimited” financial backing from foreign governments is an unfair advantage and would have enabled PPF to make larger investments or be more aggressive in the market.
Commitments
To allay the EC’s competition concerns the operator proposed it will remove its unlimited funding guarantee from the EIA by adhering to bankruptcy law. It will prohibit any financing from the EIA and e& for PPF’s activities in the EU, and pledged to inform the EC of future acquisitions.
The EC accepted these commitments as valid for the next 10 years and can be extended by the body by another five years.
“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, said EC Executive Vice-President, Margrethe Vestager.
The EVP added the decision was a “positive outcome”.
