European Union

On 1 December 2024 the 2025-2029 College of Commissioners took office, led by President Ursula von der Leyen in her second term. This blog explores what companies can expect from the new Commission regarding the EU Foreign Subsidies Regulation (“FSR”).

The FSR was adopted in December 2022 to address distortions caused in the EU by foreign subsidies. It introduced two notification tools for prior clearance of concentrations and public procurement procedures – effective since 12 October 2023 – and an ex officio tool for investigations by the Commission into suspicious foreign subsidies – effective since 12 July 2023. For a detailed overview of the FSR, see our previous blog post.

Key takeaways

  • The first year of FSR enforcement has seen a higher number of FSR notifications than the Commission anticipated in its 2021 Impact Assessment, in terms of both transactions and public procurement procedures. The Commission has initiated four in-depth investigations. By contrast, the ex officio tool has rarely been used with only two investigations launched.
  • For its 2025-2029 mandate, the Commission is aiming to vigorously enforce the FSR, especially as regards concentrations.
  • The Commission appears willing to discuss possible amendments to the FSR (in particular, to the public procurement notification thresholds).

Continue Reading The EU Foreign Subsidies Regulation – Outlook for the European Commission’s 2025-2029 Mandate

On 3 September 2024, the European Court of Justice (“ECJ”) published its highly-anticipated judgment in Illumina/Grail v Commission (Joined Cases C‑611/22 P and C‑625/22 P) (“ECJ Judgment”), regarding the scope of application of Article 22 of the EU Merger Regulation (“EUMR”).

The ECJ set aside the EU General Court (“GC”) judgment (Case T‑227/21) and ruled that the European Commission (“Commission”) does not have jurisdiction over transactions referred to it by the national competition authorities of EU Member States (“NCAs”) if the transactions do not meet the national thresholds of the referring EU Member States.

Key takeaways

  • Based on a historical, contextual, and teleological interpretation of Article 22 EUMR and the EUMR itself, NCAs cannot ask the Commission to examine transactions which do not meet their national thresholds.
  • Article 22 EUMR provides for a corrective function regarding the allocation of competences between the Commission and NCAs, and is to limit the possibility of multiple parallel notifications, providing legal certainty and facilitating the one-stop shop principle.
  • An amendment of the EUMR thresholds and/or referral rules to capture below-threshold transactions would likely entail a burdensome legislative process and complex negotiations with EU Member States.
  • The Commission can still rely on (i) new thresholds which have by now been introduced in some EU Member States to catch transactions outside the scope of their traditional turnover-based thresholds, and (ii) the possibility for NCAs to review these transactions by means of Article 102 TFEU, which prohibits abuses of a dominant position.

Continue Reading ECJ decides that EU Member States cannot refer below-threshold transactions to the European Commission (Illumina/Grail v Commission)

On Episode 20 of Covington’s Inside Privacy Audiocast, Dan Cooper, Co-Chair of Covington’s Data Privacy and Cyber Security practice, and Christian Ahlborn, Partner in Covington’s Competition practice, discuss the recently enacted EU Digital Markets Act (DMA) in the first part of our “Competition and Privacy” mini series.

For more information on the DMA…

Continue Reading Inside Privacy Audiocast: Episode 20 – Competition and Privacy Series: The EU’s Digital Markets Act

On 22 June 2022, the EU’s General Court (“GC”) fully dismissed thyssenkrupp’s appeal against the European Commission’s (“Commission”) decision to block its proposed joint venture (“JV”) with Tata Steel in 2019.

This is the first time that the GC has considered the prohibition of a “gap” case under the EU Merger Regulation (“EUMR”) since it annulled the Commission’s prohibition of CK Hutchison’s proposed acquisition of Telefónica UK (O2) in 2020 (“CK Hutchison”) (see our previous blog post here). A “gap” case is a merger in an oligopolistic market that does not result in the creation or strengthening of an individual or collective dominant position. Rather, it risks causing a “significant impediment to effective competition”.

This result may indicate a return to a more traditional approach by the GC as regards “gap” cases than that demonstrated in the CK Hutchison judgment. The judgment also provides helpful guidance on the interpretation of the EUMR and other legal instruments (such as the Market Definition Notice and the Notice on Remedies). The key findings are:

  • Standard of proof: In order to block a “gap” merger, the Commission must show with a sufficient degree of probability that the transaction significantly impedes effective competition in the internal market or in a substantial part of it.
  • SSNIP test: The Commission is not required to apply the SSNIP (small but significant and non-transitory increase in price) test when assessing substitutability between products — it is only one of the methods available to the Commission when defining the market.
  • Remedies: When assessing remedies, it is not necessary to demonstrate that the remedies remove the entire overlap between the merging parties or re-create fully the pre-merger structure in affected markets.
  • Requests for Information (“RFI”): There is no procedural error where the Commission fails to take additional steps (beyond sending systematic reminders) to ensure that recipients respond to an RFI.

Continue Reading EU General Court Upholds Tata Steel/thyssenkrupp JV Prohibition

On 30 June 2022, the Council of the EU (the “Council”) and the European Parliament (the “Parliament”) reached a much awaited agreement on the proposal of the European Commission (the “Commission”) for the Regulation on foreign subsidies distorting the internal market (the “FSR”) (see our alert on the proposal). This political agreement swiftly concludes the trilogue discussions initiated in the beginning of May this year, after the Council (see our blog post) and the Parliament (see our blog post) each adopted their own positions. The agreement has been approved by the Permanent Representatives Committee (“COREPER”) of the Council on 13 July and the Committee on International Trade of the European Parliament on 14 July.

The FSR grants substantial new powers to the Commission and “will help close the regulatory gap whereby subsidies granted by non-EU governments currently go largely unchecked”, according to remarks from Executive Vice-President of the Commission, Margrethe Vestager. It will be deeply transformative for M&A and public procurement in the EU.

The agreement on the FSR did not lead to any major changes in the proposal made by the Commission. The most notable points of discussion between the Parliament and Council and the outcome of this agreement are:

  • The thresholds above which companies are obliged to inform the Commission about their foreign subsidies remain unchanged compared to the Commission’s proposal;
  • The time period in which the Commission has to investigate foreign subsidies in large public procurement has been reduced. In the same way, the retroactive application of the FSR has been limited to foreign subsidies granted in the five years prior to the application of the regulation;
  • The Commission will issue guidelines on the existence of a distortion, the balancing test and its power to request notification of non-notifiable transactions, at the latest three years after the entry into force of the FSR; and
  • A commitment to a multilateral approach to foreign subsidies above the FSR and the possibility for the Commission to engage in a dialogue with third countries has been included.

Continue Reading The Council of the EU and the European Parliament agree on the Foreign Subsidies Regulation

On 30 May 2022, the European Union (“EU”) adopted the revised Regulation on guidelines for trans-European energy infrastructure (No. 2022/869) (the “TEN-E Regulation 2022”), which replaces the previous rules laid down in Regulation No. 347/2013 (the “TEN-E Regulation 2013”) that aimed to improve security of supply, market integration, competition and sustainability in the energy sector. The TEN-E Regulation 2022 seeks to better support the modernisation of Europe’s cross-border energy infrastructures and the EU Green Deal objectives.

The three most important things you need to know about the TEN-E Regulation 2022:

  • Projects may qualify as Projects of Common Interest (“PCI”) and be selected on an EU list if (i) they fall within the identified priority corridors and (ii) help achieve EU’s overall energy and climate policy objectives in terms of security of supply and decarbonisation. The TEN-E Regulation 2022 updates its priority corridors to address the EU Green Deal objectives, while extending their scope to include projects connecting the EU with third countries, namely Projects of Mutual Interest (“PMI”).
  • PCIs and PMIs on the EU list must be given priority status to ensure rapid administrative and judicial treatment.
  • PCIs and PMIs will be eligible for EU financial assistance. Member States will also be able to grant financial support subject to State aid rules.

Continue Reading The European Union adopted new rules for the Trans-European Networks for Energy

On 17 February 2021, the General Court of the European Union (“General Court”) in Cases T-259/20 and T-238/20 dismissed Ryanair’s challenges to pandemic aid packages introduced in France and Sweden in order to support the domestic airline sector. The judgments are the first ones where the General Court has decided on the legality of the State aid schemes adopted in response to the COVID-19 pandemic.
Continue Reading EU General Court dismisses first two challenges to State aid awarded to national airlines in response to the COVID-19 pandemic

On 17 June 2020, the European Commission (‘Commission’) published a White Paper “on levelling the playing field as regards foreign subsidies” which outlines a proposal for a series of new investigatory and enforcement tools, intended to identify and counteract the possible distortions of competition in the EU single market due to foreign subsidies. A public consultation ran until 23 September 2020, inviting stakeholders to provide their views on the options set out in the White Paper.
Continue Reading The European Commission Adopts a White Paper on Foreign Subsidies to Protect the EU Single Market

On 17 June 2020 the European Commission (“Commission”) published a White Paper on new enforcement powers regarding foreign subsidies. This initiative pursues two objectives, first it sets out a general policy approach for foreign subsidies, and second, it provides a number of proposals to address a perceived regulatory gap. More specifically, the White Paper suggests new tools to manage what the Commission regards as unfair competition and other distortions of competition within the internal market caused by foreign subsidies.

The White Paper proposes these new review powers of the Commission and/or other competent authorities in addition to already existing tools such as antitrust and merger control, State aid and FDI screening. As such, the Commission outlines a complementary toolbox aimed to facilitate transparency regarding foreign subsidies and maintain a level playing field within the EU internal market.
Continue Reading European Commission publishes White Paper on the Review of Foreign Subsidies – [New/More] Intervention Powers ahead?

The FDI space in Europe remains dynamic. Less than five months from the entering into force of the EU FDI Regulation, and just two months since the European Commission asked the Member States to both strengthen and “vigorously” implement the tools available to them and, where appropriate, introduce new FDI screening mechanisms –on which we reported in our previous alert –the past week manifested a number of legislative activities across Europe.

In this blog, we consider the changes proposed or made to laws in Germany, Hungary, Poland and Austria. Overall, we observe a further tightening of the legislative field, lowering the intervention thresholds / filing requirements, while increasing the sectors covered.

Besides the jurisdictions covered in the following, a new FDI law was also proposed in the Czech Republic in April and will be discussed and debated in the Czech Parliament in the coming weeks – watch this space for further updates.
Continue Reading Regulation of Foreign Direct Investment (“FDI”) gathers Pace across Europe – A Week of Change.