Brussels, November 14, 2025 — The European Commission (EC) has conditionally cleared Abu Dhabi National Oil Company’s (ADNOC) acquisition of Germany-based Covestro under the Foreign Subsidies Regulation, after finding that foreign financial support from the United Arab Emirates could have distorted both the acquisition process and post-transaction competition in the internal market.
Commission’s Findings
The in-depth investigation confirmed that ADNOC and Covestro received foreign subsidies from the UAE, including an unlimited State guarantee for ADNOC, a committed capital increase into Covestro, and advantageous tax measures. The Commission found that these subsidies could have provided unduly favourable terms in the acquisition process — potentially deterring rival bidders — and would likely distort competition within the EU following the merger.
According to the Commission, the subsidies would have artificially improved the merged entity’s capacity to finance EU operations and increased its indifference to risk, enabling more aggressive investment strategies to the detriment of other market participants.
Remedies Offered
To address these concerns, ADNOC committed to removing the unlimited State guarantee by amending its articles of association to fully align with ordinary UAE insolvency law. The company also agreed to share Covestro’s patents in the sustainability field with selected market participants on transparent, pre-defined terms.
The Commission concluded that these commitments would eliminate the problematic guarantee and balance out the negative effects of the subsidies by providing competitors access to key sustainability-related technology.
The commitments will apply for 10 years, with patent-licensing agreements continuing for their full contractual term. An independent trustee, under Commission supervision, will monitor implementation.
“We have carefully assessed the foreign subsidies involved in this transaction to ensure a fair and competitive internal market. Our review confirmed that the commitments offered by ADNOC effectively address the potential negative effects by allowing market participants to access key Covestro patents in the field of sustainability. Clear, pre-defined access to these patents will enable others to innovate and advance research in an area that is critical for Europe’s future. We welcome the constructive cooperation shown by both ADNOC and Covestro in reaching this solution,” Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition, said.
FSR Procedure
The decision concludes a 90-working-day in-depth review under the Foreign Subsidies Regulation, which requires notification of concentrations where EU turnover exceeds €500 million and foreign financial contributions exceed €50 million over three years.
Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_25_2687
