Investing.com -- Paramount Skydance Corp's acquisition of Warner Bros Discovery faces European Union scrutiny over foreign subsidies, according to a European Commission filing.

The U.S. entertainment company submitted an application for EU approval under the Foreign Subsidies Regulation on Tuesday. This regulation addresses concerns about unfair foreign state aid in business transactions.

The European Commission, which enforces EU competition rules, has until July 14 to decide whether to approve the transaction or launch a full investigation lasting 90 working days.

Three Middle Eastern sovereign wealth funds are supporting the acquisition: Saudi Arabia's Public Investment Fund, Abu Dhabi-based L'imad Holding Company, and Qatar Investment Authority.

The transaction is undergoing review under both EU subsidy rules and EU merger regulations. The subsidy review is expected to be less complex than the merger review, where the companies will likely need to offer concessions such as divesting a children's channel to address EU competition concerns.