November 14, 2025 14:25

After taking time to conduct a detailed assessment of the transaction under the Foreign Subsidies Regulation, the European Commission has given conditional approval to the proposed acquisition of German chemical group Covestro by the Abu Dhabi National Oil Company (Adnoc) of the United Arab Emirates.

Brussels' concerns focused on the potentially distortive effects of subsidies granted by the UAE, particularly an unlimited state guarantee provided to Adnoc by the Emirati government, and a committed capital increase in Covestro that Adnoc pledged to undertake.

During the in-depth investigation launched in July, the Commission gathered additional information from the parties and competitors, determining that Adnoc and Covestro had indeed received foreign subsidies from the UAE with an impact on the EU internal market. These subsidies may have produced negative effects during the acquisition process and could distort competition within the EU internal market after the transaction.

According to the Commission, these subsidies overall would have artificially improved the capacity of the merged entity to finance its activities within the EU internal market, reducing its sensitivity to risk. This could have led to more aggressive investment strategies, to the detriment of other market operators and competitive conditions.

To address the Commission's competition concerns, Adnoc committed to amending its articles of association so that they no longer deviate from ordinary UAE insolvency law, thereby removing the unlimited state guarantee.

In addition, Adnoc will share Covestro's patents in the area of sustainability with certain market participants for ten years, under transparent and pre-defined terms and conditions.
This commitment will particularly benefit competitors who rely heavily on access to such technologies.

The Commission concluded that these commitments effectively address the identified concerns, especially due to their potential positive impact on innovation in the chemical industry, notably in the field of sustainability. As a result, the modified transaction no longer raises competition concerns.

“We have carefully assessed the foreign subsidies involved in this transaction to ensure a fair and competitive internal market,” said Teresa Ribera, executive vice president for Clean, Just and Competitive Transition. “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.”

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