Foreign subsidies under the EU microscope
07 May 2021
On 5 May 2021, the European Commission (EC) published a draft Regulation aimed at remedying distortions in the EU single market caused by companies receiving subsidies from non-EU entities.
Key features of the proposed new regime are a mandatory filing obligation for certain mergers backed by foreign subsidies – distinct from any filings required under EU merger control / foreign investment control rules – and a requirement to notify foreign financial contributions when participating in public procurement tenders over a certain value (with the EC able, in both scenarios, to require notification in situations where it suspects foreign subsidies may have been granted in the previous three years).
The draft Regulation also gives the EC a wide investigative power – with no time limits – regarding any suspected distortion of the single market by foreign subsidies.
Our alert explains when a subsidy granted by a non-EU entity is likely to be considered distortive and discusses the new framework and its implications.