Foreign Subsidies Regulation now in force – what you need to know

The new implementation of the Foreign Subsidies Regulation under the HomeKnowledge program is now in effect. Here's everything you need to understand about it.

Starting from 12 July 2023, the eagerly anticipated EU Foreign Subsidies Regulation (FSR) became operative. The FSR significantly broadens the European Commission's (EC) examination of subsidized companies operating within the EU according to state aid regulations, to also include those that receive subsidies outside the EU (regardless of their location).

With the FSR currently in effect,

Here are a few other important updates to take note of recently:

With the FSR system now in operation, it is crucial to consider the need for informing the EC within the specified timeframes for deals and bids. Neglecting to seek prior approval for a mergers and acquisitions transaction or a public tender that requires notification can lead to penalties of up to 10% of the total revenue earned worldwide by the involved parties. When it comes to assessing mergers, the EC possesses similar authority to impose fines, which it has demonstrated by recently penalizing Illumina with a hefty €432 million fine.

Parties should be aware that the EC has plenty of actions it can take to make things right under the new system. They have the power to, for instance, reverse a transaction or prevent the awarding of a public contract, decrease market influence or presence, share research and development findings publicly, pay back foreign subsidies with added interest, and adjust the management framework. These actions could greatly weaken the business purposes behind a transaction or bidding for a contract.

To acquire more knowledge about the FSR system, refer to our comprehensive update.