The European Union’s recent Foreign Subsidies Regulation (FSR) has given the European Commission (EC) sweeping authority to regulate subsidies from non-EU nations, supplementing the Union’s established state aid regime that manages subsidies from EU Member States.
By extending its reach beyond the borders of its constituent nations, the EC now wields influence on policies regarding subsidies from countries outside the EU. The full Fact Sheet provides in depth knowledge regarding this regulation.
The implications of the new FSR are significant for multinational firms operating within the EU. With this regulation, the EC is now able to supplement the existing subsidy control landscape, adding an international dimension to an area typically addressed by domestic policy. The goal is to ensure a level playing field where non-EU countries do not undermine competition within the union by means of subsidising their firms.
In addition, the FSR allows the EC to take remedial measures if it finds that a foreign subsidy distorts the internal market, regardless of any benefits it might bring. This means that EU entities could be required to pay back subsidies – including those provided by non-EU governments – that are found to give an unfair advantage.
Given the FSR’s impact, international corporations, and law firms advising these entities, will need to assess and understand the full range of implications that stem from this regulation. Understanding the new regulatory terrain will be key to formulating savvy legal strategies and ensuring business continuity.