As of 12 October 2023, businesses will be required to notify the Commission under the Foreign Subsidies Regulation (FSR) if they intend to undertake substantial mergers and acquisitions (M&A) or participate in major public procurement projects if certain thresholds are met. The notification requirement applies to M&A transactions that are signed on or after 12 July 2023 and closed after 12 October 2023. The notification requirement will also apply from 12 October 2023 to businesses participating in new and ongoing public procurement procedures where no contract has been awarded by that date, unless the public procurement procedure was initiated before 12 July 2023.

On 10 July 2023, the Commission adopted Implementing Regulation (EU) 2023/1441 (FSR Implementing Regulation). Supplemented by Questions and Answers published by the Commission in early June 2023, the FSR Implementing Regulation provides details on the procedural aspects of the implementation of the FSR and contains the long-awaited notification forms. The FSR Implementing Regulation took into account the extensive concerns raised by both EU and non-EU businesses about the heavy administrative burden of the disclosure of foreign financial contributions required in the (previously published) draft notification forms. Those initial forms required the disclosure of detailed information of each foreign financial contribution, which included notably all contracts concluded with government entities at market terms and nonselective tax measures that conferred an advantage. In practice, this would require the disclosure of a vast amount of information that companies normally do not keep track of in a systematic way as they do for sales revenues or assets, which are the more traditional filing thresholds used for merger control.

Among other clarifications, the FSR Implementing Regulation provides that the notifying parties in M&A transactions and in procurement projects will only need to disclose the following in the filing:

• Detailed information on financial contributions that are most likely to qualify as “foreign subsidies” under the FSR (such as financing to ailing businesses and unlimited guarantees) and that are at least £1 million; and
• An overview only of all other financial contributions of at least €1 million and in relation only to those countries that in total have granted in M&A notifications, at least €45 million and in procurement notifications, at least €4 million to the notifying businesses over the past three years, subject to a number of exceptions.

It should be noted, however, that even financial contributions which do not need to be disclosed in the notification form are considered in the calculation to determine whether the notification thresholds are met. 

Moreover, the FSR Implementing Regulation sets out the conditions for requesting waivers regarding the obligation to submit certain information required by the notification form and the time limits for the investigation process. The Commission will consider written waiver requests made during prenotification contacts where the notifying parties give adequate reasons why the relevant information is: (i) not reasonably available; or (ii) not necessary for the examination. 

In addition, the FSR Implementing Regulation clarifies details on the notification procedure, including the date on which a notification is deemed to be effective, and on the investigation procedure, as well as the process to be followed by businesses wishing to offer commitments to address any possible concerns. The FSR procedure is largely based on the EU Merger Regulation, with the only notable difference being that, in contrast with the EU Merger Regulation, there is no oral hearing. Additional practical information is now also available on the Commission’s website, including information on the digital document exchange platform to be used for the exchange of all official documents with the Commission. Templates for documents such as power of attorney and the tables for turnover data are also available on the Commission’s website. 

While there is no formal procedure for third parties, the Commission expects to gather valuable information on problematic foreign subsidies both from EU member states and businesses who might have suffered adverse results from foreign subsidies in the context of an M&A bid process, an EU procurement procedure, or even general market conduct. Under the FSR, the Commission has the ability to open an ex officio investigation regardless of whether a particular merger transaction or participation in a public procurement was formally notified or not.

Finally, the FSR Implementing Regulation contains detailed rules on the calculation and suspension of various time limits provided for in the FSR and on the procedural rights of the parties such as the protection of confidentiality, the right to access to the file, and the right to submit observations.