EU Foreign Subsidies Regulation: Combating Market Distortions

Mar 17, 2023 Benn-Ibler Rechtsanwälte

On 12 January 2023, Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022, the so-called Foreign Subsidies Regulation (hereinafter FSR) which is intended to combat distortions of the EU internal market, has entered into force. A regulatory gap had led to unfair competition conditions on the EU market, which has now been closed with this regulation.

The FSR applies to all sectors of the economy and to all companies operating in the EU. It covers both mergers and public procurement procedures as well as all other market situations.

According to the FSR, the following tools will apply:

• The obligation for companies to notify the Commission in advance of mergers where the EU turnover of the acquired company exceeds EUR 500 million and the third-country financial contributions amount to at least EUR 50 million (Art 20 (3) (a) and (b)).
• The obligation for companies to apply to the Commission of their participation in public procurement procedures for approval if the estimated value of the contract exceeds EUR 250 million and the associated third-country financial contribution amounts to at least EUR 4 million per third country (Art 28 (1) (a) and (b)).
• The power to initiate ex officio investigations into all other market situations if it is suspected that subsidies from third countries may be involved.

The Regulation entered into force on 12 January 2023. The provisions apply as of 12 July 2023, from which date the Commission is empowered to investigate. The notification requirements for mergers and public procurement procedures go live on 12 October 2023 (Art 54(4)).

Regulation (EU) 2022/2560 of 14.12.2022, OJ L 330 of 23.12.2022