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Law
Competition Policy

The Foreign Subsidies Regulation in a nutshell

Scope

Under the Regulation, the Commission has the power to investigate financial contributions granted by non-EU governments to companies active in the EU. If the Commission finds that such financial contributions constitute distortive subsidies, it can impose measures to redress their distortive effects.

The Regulation introduces three procedures:

  • A notification-based procedure to investigate concentrations involving financial contributions granted by non-EU governments, where the acquired company, one of the merging parties or the joint venture generates an EU turnover of at least €500 million and the parties were granted foreign financial contributions of more than €50 million in the last three years;
  • A notification-based procedure to investigate bids in public procurement procedures involving financial contributions by non-EU governments, where the estimated contract value is at least €250 million and the bid involves a foreign financial contribution of at least €4 million per third country in the last three years; and
  • An ex officio procedure to investigate  all other market situations, where the Commission can start a review on its own initiative.

Procedure

Above the relevant thresholds, with respect to the two notification procedures, the parties must notify financial contributions received from non-EU public authorities prior to concluding a concentration or to a public procurement award . The Commission can also request ad-hoc notifications for concentrations and public procurement procedures below the thresholds, if it suspects the existence of distortive foreign subsidies. Pending the Commission’s review, the concentration in question cannot be completed and the investigated bidder cannot be awarded the contract.

The ex officio procedure  allows the Commission to start investigations on its own initiative if information indicates the possibility that a foreign subsidy distorting the internal market exists.

If in an in-depth investigation the Commission establishes that a foreign subsidy exists and is distortive, it will balance the negative effects of the subsidy in terms of distortion against the positive effects of the subsidy to determine appropriate redressive measures or to accept commitments.

With respect to the redressive measures and commitments, the Regulation includes a non-exhaustive and illustrative list of structural or non-structural remedies, such as the divestment of certain assets or providing access to infrastructure. In case of notified transactions and if the notifying parties do not propose effective remedy to fully remove the distortion, the Commission can also prohibit the notified concentration or the award of the public procurement contract to the subsidised bidder.

Further information about the FSR - Questions and Answers