The European Union’s Foreign Subsidies Regulation No. 2022/2560 (FSR), with its notification obligations, began to be implemented as of October 12, 2023. As law professionals will know, this is a major development with significant implications for many businesses operating in and with the EU.
The FSR is intended as a mechanism to ensure fair competition within the EU’s internal market. Aimed at foreign subsidies that have the potential to distort the EU market, it is anticipated that this will lead to a more balanced economic relationship between EU and non-EU based businesses.
Under this regulation, any financial contribution by a non-EU government that confers a benefit to an entity engaged in an economic activity within the EU will be considered a foreign subsidy. Although the FSR does not exempt certain sectors, companies above specified turnover thresholds will be required to notify the Commission of any foreign subsidy received.
This calls for businesses that operate both within the EU and contract with foreign governments to reassess their operations. A new era of regulation and compliance is upon us, calling for heightened vigilance from those in the legal profession. Each firm, corporation or individual must carefully consider their status and ensure they are not falling foul of these new regulations.
With potential legal and strategic implications for businesses, we recommend any organisation likely to be impacted by these new EU laws to familiarise themselves with the comprehensive legal analysis found at JD Supra.