Jurisdiction(s):
United Kingdom

First EU Foreign Subsidies Regulation (FSR) in‑depth M&A investigation: e&/PPF; guidance on distortion and balancing test; commitments and timing implications for major transactions

Published on: 02 September 2024

Published by a Law360 reporter

Legal News

Article summary

Takeaways from first EU foreign subsidy M&A investigation

This matter concerns the planned purchase by Emirates Telecommunications Group Company PJSC (e&) of PPF Telecom Group B.V. (PPF), excluding PPF’s Czech operation. e& is a UAE state-controlled telecommunications operator, while PPF is a European operator. Under the FSR, the Commission may scrutinise and remedy subsidies granted by non-EU states to companies active in the EU, including EU-based firms. The regime covers certain large M&A deals and public procurement, and the Commission can also open investigations into other market situations on its own initiative. The duty to notify qualifying transactions for clearance has applied since 12 October 2023. The FSR now acts as a third layer of general regulatory oversight for some EU-relevant deals, alongside merger control and foreign direct investment screening. Whether a deal must be notified depends in part on the extent of any financial contribution from a foreign government or related body—i.e., foreign financial contributions. The notions of ‘foreign financial contributions’ and ‘foreign subsidies’ are distinct; a foreign subsidy comprises only those foreign financial contributions that...

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