The FSR started as a much-expected tool to contribute to the level playing field in the Single Market. The mood, however, has changed. The draft Implementing Regulation published by the Commission in early February received fierce criticism by companies and business associations (cf. europa.eu: Distortive foreign subsidies – procedural rules for assessing them). Rather than the desired protection from distorting foreign subsidies, companies believe that the FSR will add “excessive red tape” and are concerned that the EU Commission has lost “sight of the big picture”.
Rumor has it that the Commission is planning far-reaching amendments to the draft filing forms. According to different sources, DG COMP has unofficially spread the word that it envisages to significantly amend the – much criticized – scope of third-country financial contributions to be notified to the Commission if an M&A deal meets the filing thresholds. It appears that the Commission is planning, inter alia, to no longer request companies to provide, in the merger filing form, information on third country financial contributions
- stemming from transactions regarding the provision of goods or services or the purchase of goods or services at market terms,
- resulting from non-selective tax advantages, or
- not exceeding certain thresholds, which would be significantly higher than the thresholds currently foreseen in the draft notification forms (EUR 200k/EUR 4m).
The above amendments would significantly alleviate the companies’ administrative burden under the FSR. They would constitute a (major) step into the direction of a more focused application of the FSR which ultimately aims at targeting foreign subsidies distorting the internal market. For full clarity we will need to await the publication of the final version of the FSR Implementing Regulation, which is foreseen for beginning of July at the latest.
Gleiss Lutz has followed the legislative process closely and will continue to inform on important developments regarding the FSR.
For further information, please see:
- M&A deals under the new EU Foreign Subsidies Regime – A taste of what to expect (8 February 2023)
- Entry into force of new EU-Foreign Subsidies Legislation – impact on upcoming M&A Transactions (11 January 2023)
- A new form of merger control – EU Foreign Subsidies Regulation formally adopted (28 November 2022)
- More red tape to be expected shortly: EU regulation on foreign subsidies
(23 December 2021) - EU Commission plans new competition law tools: White Paper on foreign subsidies (17 June 2020)
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