EU Legislators Agree on a Regulation Targeting Foreign Subsidies

On 30 June 2022, the European Parliament (EP) and the Council reached a provisional agreement on the EU Foreign Subsidies Regulation (FSR) which will allow the European Commission (the Commission) to screen non-EU government subsidies. Formal approval is anticipated later this year and the new rules to enter into force by mid-2023.

Targeting companies that receive financial contributions from governments outside the EU, the FSR introduces new notification regimes for both mergers and public tenders and equips the Commission with an arsenal of investigatory and remedial powers, including dawn raids, fines and prohibitions of mergers and awards of tender contracts. Given its broad scope, the FSR is expected to have far-reaching implications for companies operating in the EU, not only companies from third countries but also EU-based companies that have received financial contributions from any non-EU government. It is time already now to keep track of such financial contributions since the rules will require records for the last five years once they enter into force.

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