The Foreign Subsidies Regulation (EU) 2022/2560 (‘FSR’), entered into force on January 12, 2023. The Regulation addresses distortions caused by foreign (non-EU) subsidies granted to companies operating in the EU. The FSR applies to all economic activities in the EU.
The FSR gives the European Commission the power to investigate financial contributions granted by non-EU countries to companies engaging in an economic activity in the EU. This power, as well as the obligations for companies under the FSR, are based on financial thresholds laid down in the Regulation. The thresholds regarding concentrations are based on turnover and the amount of the foreign financial contribution, and regarding public procurement procedures, the thresholds are based on contract value and the amount of foreign financial contribution. The concentrations notified under the FSR cannot be completed and public procurement contracts where the bidder is being investigated, cannot be awarded pending an investigation by the European Commission. If the European Commission finds the foreign subsidy to distort the Single Market, it may impose redressive measures on companies, or accept commitments to remedy the distortion. The European Commission can also prohibit the completion of a subsidised concentration or the award of a public procurement contract to a subsidised bidder.
The FSR will be applied as of July 12, 2023. The notification obligation for companies will be effective as of October 12, 2023.