Abu Dhabi National Oil Company (ADNOC) has sharply criticized the European Commission for what it described as disproportionate and invasive information requests in the EU’s ongoing subsidy investigation into its proposed acquisition of Covestro. The $17 billion (€14.7 billion) deal, announced in October 2024, represents ADNOC’s largest acquisition to date and one of the biggest Gulf state takeovers of a European company.
The European Commission, which enforces competition policy in the EU, said on Wednesday that it had temporarily suspended its review of the transaction under the bloc’s new Foreign Subsidies Regulation (FSR). The pause was triggered by ADNOC’s failure to provide requested information deemed necessary to advance the investigation. Once ADNOC complies, the Commission will set a new deadline for its decision. The previous deadline had been set for December 2.
A spokesperson for XRG, ADNOC’s international investment arm, expressed frustration with the EU’s approach:
“We are deeply disappointed by today’s decision. The Commission’s demands have strayed far beyond what is reasonable or relevant to this transaction, crossing into areas that are both disproportionate and invasive,” the spokesperson said in an emailed statement.
The spokesperson further warned that the continuation of such regulatory practices “raises serious questions about the viability of this investment,” while reaffirming ADNOC’s willingness to “pursue a constructive path forward.”
As Antitrust Intelligence reported, the EU probe is examining whether ADNOC has benefited from foreign subsidies provided by the United Arab Emirates, including an unlimited guarantee and a committed capital increase. The European Commission is assessing whether the €62-per-share offer is excessively generous and if the 10% capital increase confers a competitive advantage that private investors could not match.
The Commission has defended its information requests as necessary to fulfill its mandate under the FSR, emphasizing that it has the authority to suspend the review process if material information is not provided in a timely manner. Moreover, as this is only the second in-depth investigation conducted under the regulation, the Commission is likely seeking to gather as much information as possible in order to set a precedent that will guide its assessment of future transactions.
ADNOC, however, maintains that some of the requests are irrelevant to the Covestro transaction.
“Some of the information requests are unreasonably broad and unrelated to this transaction. That said, we are committed to finding a constructive path forward so that the agreement can be concluded in a timely manner,” the XRG spokesperson said.
The acquisition of Covestro, a leading producer of chemicals used in foams for mattresses, automotive seating, and building insulation, is seen as a strategic step for ADNOC to expand beyond oil and gas into advanced materials and chemicals. However, the dispute with EU regulators underscores the growing scrutiny faced by foreign investors under the bloc’s new subsidy control regime.
If regulatory concerns cannot be resolved, ADNOC has warned that the deal itself could be at risk.
