The EU Foreign Subsidies Regulation (FSR) came into force in 2023. It gives the European Commission far-reaching new powers to take action against distortions in the internal market caused by subsidies granted by third (non-EU) countries. The cornerstones of the FSR are new notification and standstill obligations for M&A deals and bids in public procurement procedures. Although this new regulatory framework is primarily targeted at non-EU companies, multinational groups headquartered in the EU are equally affected. The new Regulation is located at the intersection of merger control, public procurement and EU State aid law. As a full service law firm, Gleiss Lutz has longstanding and leading practices in all these areas. We have followed the FSR legislative process closely from the very beginning and were involved in the very first FSR filings with the Commission.
M&A Deals
M&A deals that exceed certain turnover thresholds or that are reviewed by the Commission on an ad hoc basis are subject to an additional notification obligation under the FSR since October 2023. A standstill obligation then applies until the transaction has been cleared by the Commission. Failure to comply with these obligations may lead to substantial fines. We have been assisting companies with their first filings since the FSR came into force. With our full service approach, we advise clients on all relevant aspects and help them plan and implement regulatory procedures and successfully complete transactions. For filings in multiple jurisdictions, we analyse what regulatory notification obligations need to be complied with – for example, under merger control, investment control, and subsidy law – and coordinate the necessary proceedings.
Public Procurement Procedures
Bidders participating in public procurement procedures must now declare financial contributions received from non-EU countries in the last three years if certain thresholds are exceeded or if the Commission requests such a notification on an ad hoc basis. National contracting authorities must implement the new obligations in invitations to tender and have to cooperate with the Commission. If the contributions exceed a certain threshold, the contract cannot be awarded until the Commission has completed its review. Gleiss Lutz advises both companies and contracting authorities and was involved in the Commission’s first public procurement investigations shortly after the FSR came into force.
Ex officio Investigations
The FSR not only introduces new notification obligations, but also allows the Commission to launch investigations into non-EU subsidies on its own initiative. We have been representing (alleged) state aid recipients in proceedings before the Commission and the EU courts in Luxembourg for many years and are therefore ideally placed to prepare companies for and counsel them through these new and unprecedented foreign subsidy investigations.
Complaints
While the FSR does not provide for a formal right to lodge complaints, companies that feel disadvantaged by competitors receiving subsidies can request support from the Commission. We advise and represent clients in proceedings brought by or against competitors before the Commission, national courts and/or national authorities.
Data Collection
Businesses have to be prepared to disclose detailed information in connection with M&A deals and procurement procedures – especially on non-EU financial contributions and subsidies received by the respective corporate group worldwide in the last three years. Gleiss Lutz’s award-winning Legal Tech team has developed an innovative, web-based tool to assist with the data collection. Our legal tech solutions allow clients to collect, update and monitor the required information particularly efficiently.
Compliance
Companies receiving subsidies in non-EU countries must bear in mind that such subsidies may be scrutinised by the Commission. We work with our clients to develop and implement tailor-made compliance programmes aimed at minimising the risk of interventions under the FSR.
