EU Issues Foreign Subsidies Regulation Guidance

The European Commission has put into effect new rules for the Foreign Subsidies Regulation (FSR), aimed at enhancing transparency and fairness in EU business operations with significant foreign contributions.

The Implementing Regulation, which details these rules, specifically addresses reporting obligations for companies in the event of market concentrations and public procurement procedures involving foreign financial contributions.

Under the FSR, companies are obliged to notify of:

• Market concentrations where the entity involved is based in the EU and has a turnover of at least €500 million, and if the parties involved have been granted aggregate foreign financial contributions of €50 million or more over the previous three years.
• Foreign financial contributions in public procurement procedures where the contract's estimated value is €250 million or more, and if the bid includes aggregate foreign financial contribution of €4 million or more per third country over the past three years.

The Implementing Regulation provides explicit instructions regarding what information needs to be included in these notifications:

For market concentrations:

• For "Article 5 financial contributions", which according to the FSR are most likely to distort the internal market (e.g., contributions to struggling companies, those directly enabling a concentration, or unlimited guarantees), companies need to provide detailed information on all contributions of at least €1 million given to the parties involved in the transaction over the past three years.
• For all other foreign financial contributions, companies must provide an overview of financial contributions, each of at least €1 million, received in the past three years. This applies specifically to those countries that have granted at least €45 million to the parties involved in the transaction during the three years preceding the concentration, with several exceptions noted.

For foreign financial contributions in public procurement procedures:

• Companies are required to share detailed information on all "Article 5" financial contributions of at least €1 million granted to the notifying parties in the three years leading up to the notification.
• For all other foreign financial contributions, companies must give an overview of financial contributions, each of at least €1 million, granted to the notifying parties over the past three years. This applies specifically to those countries that have granted at least €4 million to each of the notifying parties per country over the three years preceding the notification.

These regulations are set to bring about a significant shift in the way companies with major foreign contributions function within the EU, and underscores the Commission's commitment to maintaining a level playing field in the Union's marketplace.

[EU Press Release]