An Addition To The European Commission's Toolbox

On November 28, 2022, the Council of the European Union adopted the Foreign Subsidies Regulation (FSR or the "Regulation"), a new legislative tool designed to prevent foreign subsidies from distorting competition in the internal market. The FSR entered into force on January 12, 2023.¹ The bulk of the FSR will only apply from mid-2023, but companies already need to start preparing for an additional layer of complexity in future deals. The regime creates a new regulatory burden – beyond EU merger control and state aid – and adds to the powers of the European Commission ("Commission"). It introduces an obligation for companies to notify the Commission when M&A transactions and bids are submitted in large public procurement tenders if the parties have benefited from material foreign financial contributions.