Foreign Subsidies in the EU: the EU control is now a reality!

On 12 July 2023, the Foreign Subsidies Regulation (“FSR”) started to apply, which means, among other things, that  the EU Commission may launch ex officio investigations on foreign subsidies in the EU.

Companies operating within the EU are indeed subject to a new set of rules aimed at countering the impact in the EU of potentially distorting subsidies from third countries. Two days earlier, on 10 July 2023, the EU Commission had adopted the Implementing Regulation detailing the procedural aspects for the implementation of the FSR.

Main guidance of the Implementing Regulation can be summarized as follows:

Reporting requirements  :

•  For concentrations: parties to the concentration must provide detailed information on all individual financial contributions (1) granted within the past three years, (2) amounting to at least €1 million, and (3) most likely to distort the internal market.  For the foreign financial contributions that are unlikely to distort the internal market, companies are just required to present an overview of financial contributions received over the past three years and amounting individually to at least €1 million.  Particular attention will be paid on financial contributions of €45 million or more over the past three-years.

•  For public procurements: companies must provide detailed information on all financial contributions (1) granted within the past three years, (2) amounting to at least €1 million, and (3) most likely to distort the internal market.  For all other foreign financial contributions, companies must provide an overview when the financial contribution amounts individually to at least €1 million, with a focus on contributions of at least €4 million per country over the last three-years.

  Notification Procedure

Starting from 12 October 2023, companies will be required to notify the EU Commission of any concentrations and participation in public procurement procedures that involve foreign financial contributions and meet the applicable notification thresholds.

The Implementing Regulation provides specific notification forms for each procedure, identifies the authorized person or entity responsible for submitting the notification, and specifies the effective date of notification.  It also gives some guidance on the articulation of that notification with other notifications under the EU regulation on merger control and on the regulation on the control of foreign direct investments.

Commission's Investigation Process

The Implementing Regulation details the procedures to be followed by companies when submitting commitments to address the concerns raised by the EU Commission during the investigation.

Procedural Rights of Parties

The Implementing Regulation defines the rules regarding the rights of the involved parties concerning the protection of confidential information, access to files and the opportunity to submit their observations.

For further information, please see our article on “The Council adopts the EU Regulation to control distortive foreign subsidies”. 

                                                                                                                                                                                        For more info, please contact: 

Bruno LEBRUN – Partner - b.lebrun@janson.be 

Candice LECHARLIER - c.lecharlier@janson.be

Wafa LACHGUER – w.lachguer@janson.be