THE IMPLICATIONS OF THE NEW EU FOREIGN SUBSIDIES REGULATION AND ITS DRAFT IMPLEMENTING REGULATION FOR INVESTORS AND BENEFICIARIES
DOI:
https://doi.org/10.35120/kij6001131vKeywords:
EU Law, Draft Implementing Regulation, FSR, notification obligations, M&A, public procurementAbstract
This article examines the notification obligations according to the draft implementing regulation of the Foreign Subsidies Regulation (“FSR”), which was implemented by the European Parliament and the Council on January 12, 2023. The draft implementing regulation establishes an extensive notification system for mergers and acquisitions (M&A) cases and public procurement, including tenders. The article outlines the main notification obligations and the required data that must be submitted to the Commission under the FSR and its draft implementing regulation.
The FSR came into effect on January 12, 2023, and will be applicable starting from July 12, 2023. As of October 12, 2023, companies are required to notify the Commission of mergers and participation in public procurement procedures when the relevant thresholds are met.
The purpose of this article is to examine the FSR and its Draft Implementing Regulation, which aim to address potential distortions in the EU internal market caused by subsidies from third countries to companies operating within the EU.
The analysis in this article is based on a review of the FSR and its Draft Implementing Regulation, and relevant legal sources. The article also considers the consultation period of the European Commission and feedback received from companies and stakeholders during the development of the draft implementing regulation. The methodology involves a detailed examination of the provisions, definitions, and notification requirements outlined in the FSR and its draft implementing regulation. The draft implementing regulation of the Foreign Subsidies Regulation presents new compliance and reporting requirements for companies operating within the EU, aiming to address potential distortions in the EU market caused by foreign subsidies. While the specific legal challenges can vary, companies and beneficiaries should be prepared for the new obligations and requirements. These include ensuring compliance, understanding the subsidy assessment criteria, cooperating with authorities during investigations, balancing transparency with the protection of confidential information, and potentially addressing legal challenges or disputes.
The implementation of the Foreign Subsidies Regulation represents a significant step in regulating third country subsidies and promoting fair competition in the EU internal market.
References
Ahlborn, C., & Maczkovics, C. (2023). What is the Information Needed for the Commission to Conduct its Substantive Assessment Under the New EU Foreign Subsidies Regulation? Competition International Policy.
Commission Implementing Regulation (EU) .../... of XXX on detailed arrangements for the conduct of proceedings by the Commission pursuant to Regulation (EU) 2022/2560 of the European Parliament and of the Council on foreign subsidies distorting the internal market.
DSG v Commission, T-234/95; T-371/94 and T-394 British Airways v Commission.
European Commission, (2023, March). Public Consultation on the Draft Implementing Regulation of Foreign Subsidies Regulation. Retrieved from https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13602-Distortive-foreign-subsidies-procedural-rules-for-assessing-them_en
European Commission (2019). Communication from the Commission – Commission Notice on the recovery of unlawful and incompatible State aid. Official Journal of the European Union, C 241/1.
ECJ, AKZO Chemie BV v Commission, C-62/86, ECLI:EU:C:1991:286
ECJ, Tetra Laval/Sidel C-12/03 P, ECLI:EU:C:2005:87
ECJ, France v Commission, C-482/99, para 52, ECLI:EU:C:2002:294
ECJ, Commerz Nederland NV v Havenbedrijf Rotterdam NV, C-242/13, ECLI:EU:C:2014:2224
PwC (2023, March). The EU's FSR Could Have a Dramatic Impact on EU Inward Investment. PwC Newsletter. Retrieved from https://www.pwc.com/gx/en/services/tax/publications/the-eus-fsr-could-have-a-dramatic-impact-on-eu-inward-investment.html
Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market. Official Journal of the European Union, L 330/1.
T-648/19, Nike Netherlands & Converse Netherlands v European Commission, EU:T:2021:428
T-597/19, Helsingin kaupunki v Commission, ECLI:EU:T:2022:554
T-342/99, Airtours v Commission, ECLI:EU:T:2002:146
Vejseli, M. (2023). Controlling the public financing from non-EU countries to companies with EU nexus - The proposal for EU Regulation on foreign subsidies, IBU Journal of Law and Politics, Vol.4/1, 2023, p.43.
