EU Foreign Subsidies Regulation Rains Down New Challenges For M&A

The transaction notification regime under the EU Foreign Subsidies Regulation (FSR) is now over a year old. To date, intervention levels are low. But assessing whether a filing is required, and gathering the extensive information required for the notification form, can be challenging and resource intensive. And the number of filings triggered has far exceeded the European Commission (EC)'s estimates, biting on investment fund-backed deals in particular. The mechanism has significantly increased the regulatory burden for M&A with an EU nexus.

As a reminder, companies must notify a transaction to the EC if the acquisition target or joint venture (or, if a merger, at least one of the merging parties) is established in the EU and has EU turnover of at least EUR500 million, and the parties received combined "financial contributions" from non-EU countries of more than EUR50m across the three year period prior to the date of the transaction.