Schalast | Foreign Subsidies Regulation
We also advise you on all matters relating to the EU Foreign Subsidies Regulation (FSR) as part of a transaction. The regulation on third-country subsidies serves to eliminate competitive distortions caused by subsidies granted by third countries to companies operating in the EU internal market. The FSR Regulation is the third pillar of third-country acquisitions, alongside (i) merger control and (ii) investment control, and must be observed in transactions primarily because the FSR Regulation, like merger and investment control, also provides for a prohibition on enforcement for the transaction instrument. The FSR Regulation entered into force on January 11, 2023 and applies to transactions from October 12, 2023.
The EU Commission thereby ensures that fair competition between companies in the member states is guaranteed and that these companies also remain competitive in comparison to companies outside Europe. The regulation provides for three instruments with which the EU Commission can examine such third-country subsidies.
With the help of the “transaction instrument”, mergers are examined to determine whether, for example, the merger is only made possible by subsidies from third countries. The “procurement instrument” involves an examination of whether a company is able to submit a particularly favorable offer in public procurement procedures with the help of subsidies. The Commission may also investigate third-country subsidies and their effects on the market without cause. Since searches can now also be carried out for violations under the Foreign Subsidies Regulation, great caution is required here. Please feel free to contact us.