The EU FSR Decision And Its Implications For Middle Eastern Investors

The EU Foreign Subsidies Regulation (FSR) has introduced a new layer of regulatory review for non-EU companies investing, bidding, or operating in the European Union. For Middle Eastern investors, particularly state-linked companies, sovereign wealth funds, and government-backed groups, the FSR is now an important consideration in European M&A and public procurement strategy.

The first in-depth FSR merger case, involving e& (formerly Etisalat) and PPF Telecom, is especially significant. Although the FSR has often been viewed as a tool aimed at Chinese state-backed investment, the first major merger investigation under the regime involved a UAE-linked acquirer. This confirms that the European Commission intends to apply the FSR broadly, including to Middle Eastern investors that receive financial contributions from public entities.