Deal placed under EU subsidy review
Paramount Skydance Corp's proposed $110 billion acquisition of Warner Bros Discovery is subject to scrutiny by the European Commission under the European Union's Foreign Subsidies Regulation (FSR). The company applied for approval under the FSR on Tuesday, triggering a review intended to identify whether foreign state support could distort competition in the EU market.
Regulatory timeline and possible escalation
The Commission, which carries out EU competition enforcement, has set a deadline of July 14 to determine whether the filing can be cleared or whether the matter should be escalated to a full 90 working day investigation. That extended probe would allow the Commission to examine in greater depth any potential distortions stemming from foreign subsidies linked to the transaction.
Backers and parallel merger review
The takeover bid is backed by Gulf sovereign investors including Saudi Arabia's Public Investment Fund (PIF), Abu Dhabi-based L’imad Holding Company, and the Qatar Investment Authority (QIA). In addition to the FSR assessment, the transaction is being examined under the EU's merger control rules. Both tracks run separately but can address different aspects of competition and state support concerns.
Comparing the subsidy and merger assessments
Officials expect the subsidy review to be the more straightforward of the two processes. The merger review is anticipated to be more challenging for the parties involved and may require remedies to resolve competition issues. In particular, the companies may need to offer concessions - for example, divesting a children’s channel - to satisfy EU competition concerns.
Implications
The FSR filing places the deal under a statutory timetable and opens the possibility of a prolonged inquiry if the Commission decides it is warranted. Separately, the merger review could lead to negotiated remedies addressing market structure and consumer choice within the EU.