On 12 October 2023, the European Union's new rules under the Foreign Subsidies Regulation (FSR) took effect. The FSR aims to tackle distortive subsidies granted by non-EU countries to companies active on the internal market. Under the new rules, M&A deals or public procurement bids concluded by companies benefiting from foreign financial contributions (FFCs) made by third-countries must be notified to the European Commission if they meet certain thresholds. An FSR notification is separate from merger control notifications and foreign direct investment screening notifications, and parties need separate clearance from the European Commission before they can implement the transaction.

Even when the notification thresholds are not met, the Commission might "call in" M&A deals before their implementation or call in bids before the award of the public contract. Under a general market investigation power, the Commission may also review implemented concentrations or review public contracts that have already been awarded. In practice, this means dealmakers will have to navigate a variety of regimes and jurisdictions, as an M&A deal could be subject to national or EU merger control, national security/foreign direct investment (FDI) control, and now also EU foreign subsidy control.

As part of an FSR filing, companies have to submit certain information about FFCs they have directly or indirectly received from non-EU countries. The collection of this data may reach across various business function lines, subsidiaries and geographies, and is a time-consuming process. Our client guide provides step-by-step help on how to gather the required information for an FSR filing in the context of an M&A transaction.