EU to review foreign subsidies

Beneficiaries of UK, USA or other non-EU state subsidies will have to notify the European Commission under a new regime when engaged in certain mergers & acquisition (M&A) transactions or tendering for certain EU public contracts.

This notification obligation commences on 12 October 2023. The transaction cannot be completed or the procurement contract entered into, until consent has been received from the European Commission following notification.

Definitions

Non-EU state subsidies has a broad definition, occurring where a third country provides, directly or indirectly, a financial contribution, for example, money (grants, loans, fiscal incentives), tax exemptions, granting of special or exclusive rights, or the purchase of goods or services.

M&A transactions means an acquisition, merger or joint venture where one of the relevant entities has a turnover in the EU of at least €500 million, and also the relevant entities have received more than €50 million in third country state subsidies over the previous three year period.

Public contracts means a contract for the supply of goods, services or works with the state, regional or local authorities and bodies governed by public law, that has a value of at least €250 million, and also the contractor, its main suppliers and subcontractors have received third country state subsidies over the previous three year period of at least €4 million from any individual third country.

There are some exceptions to the notification obligation. The European Commission must grant consent within 25 working days of the notification or initiate an in-depth investigation. Ultimately, the European Commission may not grant consent or do so subject to conditions.

From 12 July 2023 the European Commission has the power to review M&A transactions and awarded public contracts falling below the above notification thresholds.

 

https://www.globaltimes.cn/page/202303/1286935.shtml