An introduction to the EU Foreign Subsidies Regulation

The Foreign Subsidies Regulation (EU) No 2022/2560 (FSR) entered into force on 12 January 2023 and  became effective on 12 July 2023. It is designed to address distortions of the EU’s internal market caused by foreign subsidies, with the aim of ensuring fair competition and a level playing field. There are two key aspects:

• Mandatory notification regime – the FSR creates a new mandatory notification regime for certain EU mergers, acquisitions, joint ventures and public tenders involving parties that have received financial contributions from non-EU countries. These deals must be cleared by the Commission before they can be implemented. The notification regime and public procurement tenders will be effective from 12 October 2023.
• Power to carry out ex officio investigations – the FSR gives the European Commission the power to investigate financial contributions from non-EU countries to businesses operating in the EU to assess whether they are foreign subsidies that distort the internal market. These new investigative powers came into force on 12 July 2023.

Who may be affected by the FSR?

Businesses which receive “financial contributions” in non-EU countries and which operate in the EU will need to be aware of the FSR and should collect data on any foreign financial contributions they receive.

Businesses planning to undertake M&A transactions or public tenders in the EU need to be aware of, and comply with, the mandatory notification regime.

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