The deal, ADNOC’s largest acquisition to date, was cleared on narrow competition grounds in May but has faced scrutiny under the European Union’s Foreign Subsidies Regulation, owing to questions over state support from the UAE. The Commission’s deeper probe was temporarily paused, but is now under fresh momentum after ADNOC submitted revised commitments.
The remedies involve removing references to an unlimited state guarantee in ADNOC’s articles of association and pledging to keep Covestro’s intellectual property rights anchored in Europe. While the Commission is expected to demand further fine-tuning based on feedback from third parties, such modifications are seen as standard in merger reviews.
EU competition experts warn the opening of the in-depth investigation reflected concerns that ADNOC may have gained undue advantage through UAE subsidies—especially the unlimited guarantee and a committed capital injection of around €1.17 billion for Covestro.
The regulatory framework being applied is the EU’s Foreign Subsidies Regulation, which came into force to curb distortions from government-backed acquisitions by non-EU firms. The Covestro transaction is among the first major cases tested under this regime.
In the earlier PPF/e& case, the Commission accepted remedies such as revocation of guarantees, prohibition on subsidies within EU operations, and ongoing reporting obligations. Analysts believe similar constraints might be applied in the ADNOC deal, adjusted for sectoral differences.
ADNOC has expressed confidence in the strength of its proposals. In October, it insisted the package is “robust and proportionate”, and welcomed the impending clearance.
By history, regulatory pauses to collect additional information are common. The Commission had suspended its review to await further submissions from ADNOC; the “stop-the-clock” mechanism is part of standard procedure under EU merger and subsidy rules.
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