The new Foreign Subsidies Regulation (the
"FSR" or the "Regulation") – entering
into force today, 12 January 2023 – introduces a further
regulatory hurdle for companies active in the EU with financial
connections to third countries. The FSR enables the European
Commission (the "EC") to screen foreign subsidies that
may have a negative impact on the internal market by allowing it to
review M&A transactions and public procurement procedures that
include financial contributions from non-EU Member States. For
companies, the FSR imposes a mandatory prior notification
obligation for such transactions and procedures if the
Regulation's notification thresholds are exceeded, as well as a
risk of heavy fines for non-compliance. Even if the notification
thresholds are not met, the FSR enables the EC to screen any
potential market distortions on its own initiative. While
highlighting the trend of the EU's increased scrutiny of
transactions on several fronts, the FSR also adds
