Questions and Answers

Notifiable concentrations under Article 20 of Regulation EU 2022/2560 for which the agreement was concluded on 12 July 2023 or later but which have not yet been implemented on 12 October 2023, will need to be notified pursuant to Article 21 of Regulation EU 2022/2560 and are subject to the standstill obligation under Article 24 of Regulation EU 2022/2560. By contrast, the notification obligation does not apply to concentrations for which the agreement was concluded on 12 July 2023 or later but which are implemented before 12 October 2023.

Notifying Parties are encouraged to engage in pre-notification contacts, in principle as of September 2023, in advance to facilitate the submission of notifications as from 12 October 2023.

In the case of the creation of joint ventures performing on a lasting basis all the functions of an autonomous economic entity (Article 20(2) of Regulation (EU) 2022/2560), the turnover threshold of Article 20(3)(a) will be met if the joint venture is established in the Union and the joint venture’s aggregate turnover in the Union is at least EUR 500 million.

Accordingly, in the case of the creation of a newly set-up joint venture (greenfield joint venture), as it cannot have any turnover of its own, this threshold is not met.

The situation is different when the joint venture is created via the change from sole to joint control of a pre-existing business or subsidiary. In these cases, the joint venture may have a turnover of its own. It is only this turnover, so not including the turnover of the initial controlling shareholder, that will need to be considered for the purposes of determining whether the threshold of Article 20(3)(a) of Regulation (EU) 2022/2560 is met (the situation would be different under Regulation (EC) 139/2004 on the control of concentrations between undertakings, where, in these situations, the turnover of the joint venture would be considered as part of the turnover of the initial parent company (see paragraph 139 of the Consolidated Jurisdictional Notice)).

The same approach should be followed in the case of changes in the quality of control in a joint control structure due to the entrance of new controlling shareholders, irrespective of whether they replace existing controlling shareholders; or in the case where undertakings newly acquire joint control of a pre-existing undertaking or business (i.e. the acquiring undertakings did not exercise any control over the target prior to the acquisition).

No. All foreign financial contributions granted to the undertakings identified in Article 20(3)(b) of Regulation (EU) 2022/2560 in the three years preceding the conclusion of the agreement, the announcement of the public bid or the acquisition of a controlling interest must be taken into account to determine whether the notification threshold set out in that provision is met.

The Form FS-CO published as Annex I to the Commission Implementing Regulation describes the information that must be provided in the notification of a proposed concentration. The Form FS-CO thus modulates the amount of information required for certain foreign financial contributions. However, these foreign financial contributions are not excluded from the calculation of the notification threshold under Article 20(3)(b) of Regulation (EU) 2022/2560.

The threshold of EUR 1 million set out in the Form FS-CO refers to an individual financial contribution granted by a single third country to one of the notifying parties (or to the target in the case of foreign financial contributions to be reported under Sections 5.1 and 5.2). Therefore, to determine whether the EUR 1 million threshold is reached, foreign financial contributions granted to different parties are not to be aggregated. For instance, if third country A grants a loan of EUR 700 000 to one notifying party and another loan of EUR 500 000 to another notifying party, neither of the notifying parties will need to include information on those foreign financial contributions in the notification form. Foreign financial contributions granted by different third countries to the same party are not to be aggregated either.  

The Commission may, based on a case-by-case assessment, require additional information on financial contributions below that threshold at any stage of the assessment.

As explained in footnote 6 of the Form FS-CO published as Annex I to the Commission Implementing Regulation, ‘established in the Union’ should be understood in accordance with the case law of the Court of Justice and includes the incorporation of a subsidiary in the Union, as well as a permanent business establishment in the Union. This means that, for instance, in the case of an acquisition of control over an entity established in a third country, the condition of Article 20(3)(a) of Regulation (EU) 2022/2560 would be met if that entity has, for example, a subsidiary or a permanent establishment in an EU Member State and the aggregate turnover of the acquired undertaking in the Union is at least EUR 500 million.

The concept of ‘control’ set out in Article 20(5) of Regulation (EU) 2022/2560 mirrors the one used under Regulation (EC) 139/2004 on the control of concentrations between undertakings. For more details on the notion of ‘control’, notifying parties can refer to Section B.II of the Commission Consolidated Jurisdictional Notice under Council Regulation (EC) 139/2004 on the control of concentrations between undertakings.

In case an undertaking relinquishes sole control of a pre-existing undertaking and maintains joint control over it, the undertaking relinquishing sole control should be considered as an “undertaking creating a joint venture” pursuant to Article 20(3)(b)(iii) of Regulation (EU) 2022/2560. The same applies in relation to a remaining jointly controlling shareholder of an undertaking, in case of change of the identity of the other jointly controlling shareholders. Therefore, the foreign financial contributions granted to the seller who will, post-concentration, have joint control over the joint venture (or the foreign financial contributions granted to a remaining jointly controlling shareholder, in the event of a change of jointly controlling shareholders), as well as the foreign financial contributions granted to any third party acquiring joint control and to the joint venture itself, should be taken into account to determine whether the threshold set out in Article 20(3)(b) of Regulation (EU) 2022/2560 has been met.

Yes. Foreign financial contributions granted in the three years prior to the concentration to a company or business divested or closed in the meantime have to be taken into account for the purposes of determining whether the jurisdictional threshold of Article 20(3)(b) of Regulation (EU) 2022/2560 is met. Those foreign financial contributions are also reportable in line with the rules set out in the Form FS-CO.

Yes. Foreign financial contributions granted in the three years prior to the concentration to a company or business which is currently controlled by one of the parties to the concentration but was not controlled at the time such contributions were granted have to be taken into account for the purposes of determining whether the threshold of Article 20(3)(b) of Regulation (EU) 2022/2560 is met. Those foreign financial contributions are also reportable in line with the rules set out in the Form FS-CO.

The concepts of “concentration”, “merger”, “joint venture” and “acquired undertaking” in Article 20 of Regulation (EU) 2022/2560 are inspired from those used under Regulation (EC) 139/2004 on the control of concentrations between undertakings. General guidance on how these specific notions have previously been interpreted can be found in the Commission Consolidated Jurisdictional Notice.

According to point 3 of Table 1 in Annex I of Implementing Regulation (EU) 2023/1441, notifying parties only need to report financial contributions of EUR 1 million or more, granted by a country where the estimated aggregate amount of all financial contributions granted in the last three years is EUR 45 million or more. The threshold of EUR 45 million should be calculated per third country cumulatively for all notifying parties. For instance, if undertaking A and undertaking B are acquiring joint control over undertaking C, the EUR 45 million threshold will be exceeded if the sum of the financial contributions granted by a specific third country to undertakings A and B exceeds this amount.

When the Target, as defined in Article 20(3)(a) of Regulation (EU) 2022/2560 has joint control over an undertaking (the “joint venture”) in the situations listed in Article 22(4)(b) of Regulation (EU) 2022/2560, the joint venture’s turnover shall be apportioned, as per Article 22(5) of Regulation (EU) 2022/2560, equally amongst the undertakings which hold joint control over it. Therefore, for the purposes of determining whether the notification threshold under Article 20(3)(a) of Regulation (EU) 2022/2560 is met, the Target shall only consider its respective per capita portion of the joint venture’s turnover. As a result, the joint venture’s turnover should be divided by the number of controlling shareholders, regardless of their respective share of capital, business assets, voting rights or the number of members they have the power to appoint on the supervisory board or other bodies legally representing the joint venture. For the purpose of determining whether the threshold set out in Article 20(3)(a) of Regulation (EU) 2022/2560 is met, only the portion thus allocated to the Target should be taken into account.

In situations outside of those listed in Article 22(4)(b) of Regulation (EU) 2022/2560 the turnover of the joint venture should not be taken into account.

For the purposes of determining whether the notification threshold under Article 20(3)(b) of Regulation (EU) 2022/2560 is met (and also for the purposes of determining whether the reporting thresholds set out in Annex I, Section 5 and in Annex I, Table 1, points 1, 3 and 6(d) of the Implementing Regulation (EU) 2023/1441 are met), the notifying parties must take into account the entire amount of any foreign financial contributions granted to the joint venture in the situations listed in Article 22(4)(b) of Regulation (EU) 2022/2560.

In situations outside of those listed in Article 22(4)(b) of Regulation (EU) 2022/2560 the foreign financial contributions granted to the joint venture should not be taken into account.

Only foreign financial contributions granted in the three years prior to the conclusion of the agreement, the announcement of the public bid or the acquisition of a controlling interest need to be considered for calculating the notification thresholds of Article 20(3)(b) of Regulation (EU) 2022/2560.

The relevant moment in time to determine which financial contributions are relevant for a given notification is the date on which the financial contribution is granted, not the date on which it is received. The financial contribution should be considered granted from the moment the beneficiary obtains a legal entitlement to receive it. The relevant event is thus not the actual disbursement of the funds.

Example 1: in the case of a grant, the relevant moment in time to consider the financial contribution as granted should normally be the date of the granting act, and therefore the entire amount of the grant should be allocated to that moment, regardless of when it is actually disbursed to the beneficiary.

Example 2: in the case of a loan, the relevant moment in time to consider the financial contribution as granted is in principle determined by the signing of the loan agreement which entitles the borrower to receive the funds. In such a case, the entire amount of the loan should be granted to that moment, even if it is payable in several instalments. More generally, the relevant moment in time will depend on the conditions set out in the loan agreement. For example, for credit lines (or revolving loans) the relevant moment in time is in principle determined by the moment of signing the agreement if, according to the terms of the agreement, the beneficiary is entitled at signing to receive the liquidity envisaged under it (i.e. there are no further conditions that need to be met), the agreement includes all the relevant details (such as interest rates), the provision of the liquidity does not require additional steps from the lender, and the agreement does not provide for the possibility for the lender to deny a drawdown or change the conditions for a drawdown provided under the credit line.

Example 3: in the case of a contract for the purchase or sale of a good or service, the relevant moment in time is in principle the date on which the contract is signed, and thus the entire amount of the financial contribution should be considered as granted at that moment. However, in contracts where the exact amount to be purchased or sold (and thus the price to be paid) is not determined in the agreement, but changes over time (for example, a regular supply of a service over several years), each portion of the financial contribution should be considered as granted at the moment on which it is finally determined. In contracts where the third country purchases a good or a service, and where the right of the provider of the good/service to receive the different instalments of the remuneration is subject to conditions or to the actual delivery of the goods/services, the relevant moment in time to consider the financial contributions granted to the provider of the goods or services is the date when it is entitled to receive the remuneration (either because the goods/services are delivered or because the conditions are met).

Example 4: in the case of foreign financial contributions in the form of tax reductions, the relevant moment in time would in principle be the date when the final tax liability is determined, so that the beneficiary is entitled to pay a lower amount of tax than what would otherwise be due.

A financial contribution provided by a private entity may be attributed to a third country when, for example, the private entity is directed or entrusted by the third country to undertake a certain action.

If an undertaking sells its products or services to a third country (including sales to public authorities as well as to public or private entities whose actions can be attributed to the third country), the sales income constitutes a “foreign financial contribution” within the meaning of Article 3(2) of Regulation (EU) 2022/2560, which counts for determining whether the notification threshold for concentrations set out in Article 20(3)(b) of Regulation (EU) 2022/2560 is met, regardless of whether the conditions of the sale are in line with normal market conditions.

However, as indicated in the Form FS-CO published as Annex I to the Commission Implementing Regulation (point 6(c) of the Table), the provision/purchase of goods/services (except financial services) at market terms in the ordinary course of business do not need to be reported in the notification, unless they fall into any of the categories of Article 5 of Regulation (EU) 2022/2560. However, the Commission may, based on a case-by-case assessment, require additional information on those transactions at any stage of the assessment.

A financial contribution that has been provided – directly or indirectly – by a third country constitutes a “foreign subsidy” within the meaning of Article 3(1) of Regulation (EU) 2022/2560 if the financial contribution in question confers a benefit on one or more undertakings engaging in an economic activity in the internal market; and if such benefit is limited, in law or in fact, to one or more undertakings or industries. In this sense, the sale of goods or services at market prices is not considered a foreign subsidy, as there is no “benefit” attached to it. This would be the case, for instance, of the provision of goods or services following a genuinely competitive, transparent and non-discriminatory tender procedure, which are presumed to be in line with normal market conditions.

Exemptions granted by third countries from ordinary tax regimes (e.g. profit-based taxes, property taxes, stamp duties etc.) constitute “foreign financial contributions” and should be counted for determining whether the notification threshold for concentrations procedures set out in Article 20(3)(b) of Regulation (EU) 2022/2560 is met.

However, as indicated in the Form FS-CO published as Annex I to the Commission Implementing Regulation, the following tax measures do not need to be reported in the notification, unless they fall into any of the categories of foreign subsidies most likely to distort the internal market, which are listed in Article 5 of Regulation (EU) 2022/2560: (i) deferrals of payment of taxes, tax amnesties and tax holidays as well as normal depreciation and loss-carry forward rules that are of general application, and (ii) application of tax reliefs for avoidance of double taxation in line with the provisions of bilateral or multilateral agreements for avoidance of double taxation, as well as unilateral tax reliefs for avoidance of double taxation applied under national tax legislation to the extent they follow the same logic and conditions as the provisions of bilateral or multilateral agreements. The Commission may, based on a case-by-case assessment, require additional information on those transactions at any stage of the assessment.

If foreign financial contributions are granted specifically to one or more undertakings engaging in an economic activity in the internal market; and if such benefit is limited, in law or in fact, to one or more undertakings or industries, then it will constitute a “foreign subsidy” within the meaning of Article 3(1) Regulation (EU) 2022/2560.

Whether that foreign subsidy is liable to distort the internal market falls to be assessed in accordance with Articles 4 to 6 of Regulation (EU) 2022/2560.

A collateral provided by a third country that is the borrower in a loan qualifies as an FFC if that collateral is transferred to the lending financial institution for the duration of the loan; and, as such, its value is to be taken into account and potentially reported as a foreign financial contribution. 

Under Article 3(2)(a) FSR, a financial contribution can take the form of ‘a transfer of funds or liabilities, such as … loans’. The total amount of ‘funds’ being ‘transferred’ in a loan consists of the principal of the loan and its remuneration (interests and any other charges). 

Therefore, a notifying party must report the entire value of the loan (i.e. the principal and its remuneration) as a foreign financial contribution. The same value must also be taken into account for the purposes of determining whether the jurisdictional threshold of Article 20(3)(b) of Regulation (EU) 2022/2560 is met.

This applies irrespective of whether the loan at issue is provided by a third country (scenario 1) or to a third country (scenario 2) or where both the lender and the borrower are entities whose actions are attributable to a third country (scenario 3).

Subsidies falling within the scope of the WTO Agreement on Subsidies and Countervailing Measures cannot be redressed under Regulation (EU) 2022/2560.

However, to the extent that those subsidies constitute foreign financial contributions within the meaning of Article 3(2) of Regulation (EU) 2022/2560, they nevertheless need to be taken into account for determining whether the notification threshold for concentrations set out in Article 20(3)(b) of Regulation (EU) 2022/2560 is met.

All foreign financial contribution granted by countries that are not EU Member States (thus including those granted by EEA EFTA countries) count for determining whether the notification threshold for concentrations set out in Article 20(3)(b) of Regulation (EU) 2022/2560 is met.

Therefore, notifying parties are in principle obliged to report these financial contributions in their notification, subject to the reporting thresholds and exceptions set out in the Form FS-CO published as Annex I of the Commission Implementing Regulation. However, during pre-notification discussions, the Commission may dispense the notifying parties, upon request, with the obligation to provide certain information which is not necessary for the examination of the case. For more information on how waivers may be granted, please see the recitals 9-11 of the Introduction to the Form FS-CO published as Annex I to the Commission Implementing Regulation.

Direct financial contributions from international organisations such as the World Bank may not be attributable to a third country, and therefore should not be considered as foreign financial contributions.

If an undertaking provides its products or services to a third country, the income generated from these sales constitutes a ‘foreign financial contribution’ within the meaning of Article 3(2) of Regulation (EU) 2022/2560, which counts for determining whether the notification threshold concerning foreign financial contributions for concentrations set out in Article 20(3)(b) of Regulation (EU) 2022/2560 is met. This also applies to contracts in the national security or defence field, or in any other field, even if those were subject to confidentiality obligations under the laws of that third country.

Whether any information in any of those sales contracts in the national security and defence field or which could be subject to confidentiality obligations must be reported under the notification for concentrations is clarified in the Form FS-CO published as Annex I to the Commission Implementing Regulation.

In particular, according to the Form FS-CO, detailed information on such sales contracts would need to be included by the notifying parties in the notification only if the provision of goods or services under those contracts falls into any of the categories listed in Article 5(1), points (a) to (d) of Regulation (EU) 2022/2560 (most likely to distort the internal market).

If the provision of goods or services under those contracts does not fall into any of the categories listed in Article 5(1) of Regulation (EU) 2022/2560, those agreements in principle do not need to be reported if the provision of products takes place at market terms (for example, if the provision of goods is carried out following a competitive, transparent and non-discriminatory tender procedure). In all other cases, only an overview of those contracts – together with all other financial contributions of the same type – should be included in the Table in reply to Section 5.3 of the Form FS-CO.

In any case, for those situations in which the provision of goods or contracts under those contracts needs to be included in the notification form, the Commission may during the pre-notification contacts dispense the notifying parties, upon reasoned request, with the obligation to provide certain information on those financial contributions, taking into account the circumstances of the case, such as the type of agreement, the sectors affected by the concentration, other financial contributions granted to the notifying parties or the target, and the scope of application and obligations imposed by the laws of the third country in question.

Pursuant to Annex I, recital 25 of Implementing Regulation (EU) 2023/1441, the appropriate exchange rates to be used for any financial data to be reported are “the average exchange rates prevailing for the years or other periods in question”. For reporting financial contributions provided in non-EUR currencies, therefore, the yearly average European Central Bank (“ECB”) exchange rate should be used for the calendar year in which the foreign financial contribution was granted. For foreign financial contributions granted in the same year as the notification, notifying parties can use the ECB exchange rate up to date (i.e. for the ongoing year).

Article 5(1)(c) of Regulation (EU) 2022/2560 requires that, for an export financing measure to fall outside the category of foreign subsidies most likely to distort the internal market, the measure itself is in line with the OECD Arrangement on Officially Supported Export Credits, regardless of whether the country granting the export financing is a member of the OECD or not. Moreover, even if such an export financing measure did fall outside the scope of Article 5(1)(c), it would still constitute a financial contribution and will thus need to be reported in Annex I, Table 1 of the Implementing Regulation (EU) 2023/1441 – assuming that the other conditions for reporting in that Table are met.

In light of the purpose of the exception set out in point 7 of the Instructions, investment companies intending to apply for that exception should provide evidence that the legislation in question includes sufficient guarantees to prevent cross-subsidisation between funds (including their portfolio companies). In particular, the legislation should include provisions ensuring that the funds are managed in the best interests of their respective investors, thus preventing profit shifting from another fund to the fund of the acquiring company via, for instance, corporate reorganisations or transactions which are not at market conditions. These provisions should include, in particular, assurances concerning an adequate monitoring of cash flows and adequate internal control mechanisms, appropriate procedures for safe keeping and independent valuation of the funds´ assets, transparency requirements vis-a-vis competent authorities and investors, measures to prevent or minimise conflicts of interest, an adequate risk management system, rules ensuring fair treatment of investors and provisions ensuring the active supervision of those funds by competent authorities. In this regard, it is for the notifying party to explain why it considers that it is subject to, and complies with, certain third country legislation and why it considers that third country legislation to comply with the condition set out in point 7(a) of the Instructions, making reference to the relevant provisions of that law.

The possibility to benefit from the exception contemplated in point 7 of the Instructions is strictly limited to the specific case and for the specific purposes laid down in the exception, i.e. to prevent possible cross-subsidisation, and should in no way be a understood as expressing any position of the Commission as regards the equivalence of third country rules within the meaning of Directive 2011/61/EU on Alternative Investment Fund Managers.

FFCs in the form of the provision/purchase of financial services by notifying parties should in principle be reported in the Form FS-CO, even if at market terms and in the ordinary course of business.

The main purpose of the exception for financial services is to avoid a situation in which financial services such as loans, guarantees or credit facilities, provided by third countries, and which could amount to foreign subsidies that potentially distort the internal market, fall outside the scope of the reporting obligation.

During pre-notification discussions, and upon request, the Commission may waive the obligation for the notifying parties to provide certain information which is not necessary for the examination of the case. In determining whether such a waiver could be granted for FFCs consisting of the provision/purchase of financial services at market terms and in the ordinary course of business, the Commission may take into account the purpose of the exception, as well as other factors such as the scope of activities of the undertakings involved in the concentration, the type of FFCs in question, or any other relevant factors. For more information on how waivers may be granted, please see the recitals 9-11 of the Introduction to the Form FS-CO published as Annex I to the Commission Implementing Regulation.

The purchase or lease of real estate (land, buildings) could fall under the reporting exception provided this transaction is at market terms and is part of the ordinary course of business.

Annex I, Table 1, point B(6)(a) of Implementing Regulation (EU) 2023/1441 provides an exhaustive enumeration. Only tax benefits in forms explicitly included in this enumeration are excluded from the reporting obligation. Other tax benefits have to be reported regardless of whether the notifying party considers them general or limited – assuming that the other conditions for reporting in that Table are met.

In line with Article 19 of Regulation (EU) 2022/2560, in the context of a notified concentration, the assessment whether a foreign subsidy distorts the internal market within the meaning of Article 4 or 5 of Regulation (EU) 2022/2560 (including foreign subsidies directly facilitating a concentration pursuant to Article 5(1)(d)) is limited to the concentration concerned. In this regard, a potential foreign subsidy directly facilitating a different concentration will fall outside the scope of the investigation of the notified concentration.

Notifying parties are asked to submit a Case Team Allocation Request to DG COMP’s Foreign Subsidies Registry functional email address, comp-fsr-registryec [dot] europa [dot] eu (comp-fsr-registry[at]ec[dot]europa[dot]eu). A template of the Case Team Allocation Request is published on DG COMP’s website. Shortly after the submission of this request, the notifying parties will be informed of the case team that will be dealing with their case. Notifying parties will then be able to contact the case team directly to start pre-notification contacts. For any question on the pre-notification of public procurement procedures, please refer to DG GROW’s functional email GROW-FSR-PP-NOTIFICATIONSec [dot] europa [dot] eu (grow-fsr-pp-notifications[at]ec[dot]europa[dot]eu).

Any information on possible foreign subsidies that may cause a distortion on the EU internal market outside the area of public procurement can be submitted to DG COMP’s Foreign Subsidies Registry functional email address, comp-fsr-registryec [dot] europa [dot] eu (comp-fsr-registry[at]ec[dot]europa[dot]eu). Any information on possible foreign subsidies in the area of public procurement procedures can be sent to DG GROW’s functional email GROW-FSR-PP-NOTIFICATIONSec [dot] europa [dot] eu (grow-fsr-pp-notifications[at]ec[dot]europa[dot]eu) .

The Form FS-CO published as Annex I to the Commission Implementing Regulation contains, in recitals 9-11 of its Introduction, instructions as to the procedure for the request of waivers. In general, all issues concerning the information to be included in the notification, including any possible waiver requests, will need to be addressed to, and discussed with, the case team appointed to the concentration in question during the pre-notification contacts following the submission of the Case Team Allocation Request.

It is for the notifying parties to assess whether the conditions for a transaction to be considered a notifiable concentration under Article 20 of Regulation (EU) 2022/2560 are met. Notifying parties are invited to discuss during pre-notification the information that needs to be included in the notification.

For any information on the application of Regulation (EU) 2022/2560 outside the area of public procurement, including on the notification thresholds for concentrations, emails can be sent to DG COMP’s Foreign Subsidies Registry functional email address, comp-fsr-registryec [dot] europa [dot] eu (comp-fsr-registry[at]ec[dot]europa[dot]eu). For questions on the application of Regulation (EU) 2022/2560 in relation to public procurement procedures, emails can be sent to DG GROW’s functional email grow-fsr-pp-notificationsec [dot] europa [dot] eu (grow-fsr-pp-notifications[at]ec[dot]europa[dot]eu) .