The EU conditionally approves the acquisition of Covestro by ADNOC, after finding some distorting foreign subsidies from the United Arab Emirates.

Brussels, November 14, 2025 The European Commission has approved, under the Regulation on foreign subsidies (FSR), the acquisition of the German chemical company Covestro by the Abu Dhabi National Oil Company (ADNOC). The decision is conditional on the full compliance with a package of binding commitments, designed to eliminate the risk of distortion of the internal market.

The Commission's in-depth investigation showed that ADNOC and Covestro benefited from foreign subsidies granted by the United Arab Emirates that are likely to affect competition. These include an unlimited state guarantee for ADNOC, a committed capital increase in favor of Covestro, and a series of tax facilities. The Commission believes that these subsidies could have influenced the acquisition process, by providing overly favorable conditions for ADNOC, thus discouraging potential alternative investors. Additionally, the subsidies could have allowed the resulting entity to adopt more aggressive investment strategies in the European market, due to an artificially increased capacity for financing and a heightened risk tolerance.

To address these concerns, ADNOC proposed two sets of commitments. First, the company will amend its articles of incorporation to eliminate the unlimited state guarantee, aligning with the usual insolvency rules applicable in the United Arab Emirates. Second, ADNOC will allow market operators access to Covestro's patents in the field of sustainability, based on transparent and predefined conditions. These licenses aim to balance the potentially negative effects of concentration and to support innovation in the European chemical industry.

The Commission concluded that the proposed commitments effectively address the identified issues, including the positive effects that access to Covestro's patents can generate in the field of sustainable technologies. The commitments will be valid for ten years, and their implementation will be overseen by an independent trustee appointed under the Commission's control. In the case of licenses granted for patents, their validity will extend for the entire duration of the licensing contracts concluded during the commitment application period.

In an official statement, Executive Vice-President Teresa Ribera emphasized the importance of the decision: "We carefully assessed the foreign subsidies involved in this transaction to ensure a fair and competitive internal market. The commitments offered allow access for other actors to essential patents in the field of sustainability, supporting innovation in a sector crucial for Europe's future."

The Regulation on foreign subsidies, applicable since 2023, allows the Commission to analyze and remedy distortions generated by financial support granted by third countries to companies active in the internal market. In the case of concentrations, notification is mandatory when at least one of the companies has a turnover in the EU of at least 500 million EUR and when the parties have received together over 50 million EUR in foreign financial contributions in the three preceding years.

https://2eu.brussels/article/news/eu-approves-conditionally-the-acquisition-of-covestro-by-adnoc-after-finding-distorting-foreign-subsidies-from-the-united-arab-emirates