The EU Foreign Subsidies Regulation (FSR) adopted in December 2022 creates a new instrument to prevent foreign subsidies from distorting the European Union (EU) internal market. It aims to fill a perceived regulatory gap left by EU State aid rules applying to subsidies granted by EU countries but not by foreign states. It started to apply on 12 July 2023 and its notification obligations kick in on 12 October 2023. Procedural details are laid down in the Implementing Regulation (IR) which entered into force on 13 July 2023.

Key things you need to know about the FSR and the IR:

  • The FSR creates an additional layer of deal conditionality for sizeable transactions besides potential foreign direct investment (FDI) and merger control clearance.
  • From 12 October 2023, when acquiring (including jointly) control of a company in the EU or participating in a public tender in the EU, companies – including EU ones – will have to notify the European Commission (Commission) of foreign financial contributions (FFCs) received from non-EU states if the relevant thresholds are met or if the Commission so requests. Notification is compulsory and suspensory. Failure to notify or to suspend closing pending clearance may lead to severe sanctions. Information requirements are far-reaching as they comprise FFCs irrespective of whether they have a link with the notified transaction or public procurement procedure.
  • Beyond notified transactions and public procurement procedures, the Commission may launch ex officio investigations where it suspects that a foreign subsidy may distort the internal market. The FSR can relate to any type of activity unless already governed by other legislation.
  • Where following an investigation (initiated either in relation to a notification or on an ex officio basis) the Commission determines that a foreign subsidy risks distorting the EU internal market, remedies could apply, and the Commission could even prohibit the transaction or the award of a public contract.

We have put together a brief overview for your reference. We would be happy to facilitate a discussion with our team to review what this regulation could mean for your company.

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Photo of Christian Ahlborn Christian Ahlborn

For more than 20 years Christian Ahlborn has been advising multinational corporates, banks and other institutions on all aspects of global competition law, combining an in-depth understanding of the subject with a pragmatic approach.

Christian is qualified in England & Wales and in…

For more than 20 years Christian Ahlborn has been advising multinational corporates, banks and other institutions on all aspects of global competition law, combining an in-depth understanding of the subject with a pragmatic approach.

Christian is qualified in England & Wales and in Germany and is widely recognized as a market-leading competition lawyer. He is also a trained economist. Christian belongs to a small group of antitrust practitioners who can bring both a legal and economic perspective to a case.

Christian advises major corporates, banks and institutions on all areas of global competition law. He has a broad range of experience in EU competition law, particularly in relation to complex M&A, behavioral antitrust work, control of dominance issues and State aid control. He is well-known for extensive work on high-profile matters.

Christian’s experience spans many industry sectors, with particular experience in financial services, IT, fast-moving consumer goods and mining.

During his career Christian has been seconded to the European Commission’s Directorate-General for Competition and to the Bundeskartellamt. He is also well known on the Brussels market.

Photo of Carole Maczkovics Carole Maczkovics

Carole Maczkovics has developed a cutting-edge expertise in State aid law, with a strong background in the economic regulation of network industries (energy and transport) and in public contracting (EU subsidies, public procurement, concessions).

Carole has a proven track record of advising public…

Carole Maczkovics has developed a cutting-edge expertise in State aid law, with a strong background in the economic regulation of network industries (energy and transport) and in public contracting (EU subsidies, public procurement, concessions).

Carole has a proven track record of advising public and private entities, which she successfully represents in administrative and judicial proceedings on complex State aid and regulatory matters before the European Commission as well as before the Belgian and European courts. She also assists clients with the application of the new EU Foreign Subsidy Regulation and UK subsidy control regime.

Carole has published many articles on State aid law and on regulated network industries, and contributes to conferences and seminars on a regular basis. She is a visiting lecturer at King’s College London and at the Brussels School of Competition on the application of regulation and competition law (including State aid) in the railway sector. Carole gives trainings on State aid law at EFE, in Paris. She has been recently appointed as Academic Director of the European State aid Law Institute (EStALI).

Photo of James Marshall James Marshall

James Marshall advises on all aspects of competition law and foreign direct investment (FDI) screening, with a focus on merger and FDI control, investigations and enforcement, commercial counselling, and abuse of dominance. He has strong experience in the life sciences, energy & infrastructure…

James Marshall advises on all aspects of competition law and foreign direct investment (FDI) screening, with a focus on merger and FDI control, investigations and enforcement, commercial counselling, and abuse of dominance. He has strong experience in the life sciences, energy & infrastructure, digital and technology, financial services, and sports sectors.

James regularly leads cross-border teams to steer clients through both the merger control and FDI aspects of major global deals. Clients turn to James to help them navigate complex global transactions, and to find innovative solutions to antitrust enforcement and counselling matters.

Earlier in his career, James worked with the UK Competition and Markets Authority (CMA), where he helped develop the UK’s antitrust and regulated sector enforcement regimes. He also practiced for several years in the Asia-Pacific region and has experience advising on competition, regulatory, and public policy issues in Asia and the Middle East.

James is a former Chair of the Competition Section Advisory Committee of the Law Society of England and Wales. He is highly recommended by Legal 500 and is recognized as leading adviser by Who’s Who Legal. James is dual qualified in England and Wales, and the Republic of Ireland.

Photo of Melissa Van Schoorisse Melissa Van Schoorisse

Melissa Van Schoorisse is a special counsel who focuses on a wide range of complex antitrust issues, including multi-jurisdictional merger control filings, international and Belgian cartel investigations, state aid matters, and general behavioral advice, counselling and compliance work.

Ms. Van Schoorisse has represented…

Melissa Van Schoorisse is a special counsel who focuses on a wide range of complex antitrust issues, including multi-jurisdictional merger control filings, international and Belgian cartel investigations, state aid matters, and general behavioral advice, counselling and compliance work.

Ms. Van Schoorisse has represented international and Belgian clients from a wide variety of industries, including the transport, media, consumer goods, power generation and energy fields.

Ms. Van Schoorisse has – prior to joining Covington – gained extensive experience as an associate at two international law firms in Brussels, and as a secondee to the in-house competition team of a multinational oil and gas company in London, dealing with a wide array of vertical issues, cartel investigations, M&A transactions, and compliance training.

Photo of Sibel Yilmaz Sibel Yilmaz

Sibel Yilmaz advises on all aspects of competition law and foreign investment within the EU, the Nordics and internationally, with a focus on life sciences, technology and private equity.

Sibel has particular expertise in the life sciences sector and has been involved in…

Sibel Yilmaz advises on all aspects of competition law and foreign investment within the EU, the Nordics and internationally, with a focus on life sciences, technology and private equity.

Sibel has particular expertise in the life sciences sector and has been involved in some of the industry’s most high profile matters in recent years, including representing Novartis on its $30 billion acquisition of GSK’s oncology business, advising Takeda on its sale of certain respiratory products to AstraZeneca and representing clients in several investigations relating to alleged excessive prices and other non-competitive practices in the life science sector.

Sibel is ranked among the world’s top antitrust practitioners by Global Competition Review, who included her in their most recent 40 Under 40 survey, as well as Chambers Global. She is described as “a brilliant and promising lawyer, who is highly recommended for complex merger work” and “an exceptional talent”, “absolutely a tip for the top.”

Sibel received her LL.M. in Law and Economics from the University of Rotterdam and Master of Law from Stockholm University and is admitted to practice in Belgium and Sweden.

Photo of Johan Ysewyn Johan Ysewyn

Johan Ysewyn is widely respected as a highly skilled European competition lawyer, advising on complex competition issues, including on merger control, anti-cartel enforcement, monopolisation cases and other conduct investigations. He acts as Co-Head of the firm’s Global Competition group and as Managing Partner…

Johan Ysewyn is widely respected as a highly skilled European competition lawyer, advising on complex competition issues, including on merger control, anti-cartel enforcement, monopolisation cases and other conduct investigations. He acts as Co-Head of the firm’s Global Competition group and as Managing Partner of the Brussels office.

Clients turn to Johan when they need cutting-edge competition and regulatory advice. He has been advising some of the world’s leading companies for over 30 years on their most complex competition issues. Johan is “an exceptional lawyer who is solution-oriented, has a remarkable ability to rapidly understand our business and has excellent reactivity.” (Chambers Global) Johan “attracts considerable praise for his reliable practice, as well as his great energy and insight into cartel proceedings.” (Who’s Who Legal)

Johan represents clients from around the world in dealings with competition authorities as well as in court litigation. He has in-depth knowledge of regulatory procedures and best practices as well as longstanding relationships with key regulators, in particular at the European Commission. He has also an active advisory practice covering a range of areas of interest to corporates, including the interplay between ESG goals and competition law, the impact of competition law enforcement on digital markets and broad strategic compliance issues.

Johan’s experience spans many industry sectors, with recent experience in telecoms and information technology, media, healthcare, consumer goods, retail, energy and transport. He has advised on several of the most major merger investigations in recent years. In addition, he has represented clients in many conduct investigations.

Johan’s practice also has a strong focus on global and European cartel investigations. He has acted for the immunity applicants in the bitumen and marine hose cartels, and acted for defendants in alleged cartels in financial services, consumer goods, pharmaceuticals, chemicals, consumer electronics and price benchmarking in the oil sector. He has acted for the European Payments Council in the first European Commission investigation into standardisation agreements in the e-payments sector. Johan has written and lectured extensively on international cartel and leniency-related issues. He co-authors the loose-leaf European Cartel Digest and lectures on cartel law and economics at the Brussels School of Competition.

Johan is also one of the leading experts on EU State aid issues, working both for beneficiaries and governments. He has advised a number of leading banks and governments, as well as represented major European airlines. From the cases that can be publicly disclosed, he has been involved in the Fortis, KBC, Dexia, Arco, Citadele, airBaltic and Riga Airport State aid cases.