Final Implementing Regulation for the Foreign Subsidies Regulation published


On 10 July 2023, the European Commission (“Commission”) published the final version of the Implementing Regulation for the Foreign Subsidies Regulation (“FSR”) (see our articles on this topic here and here).

The Implementing Regulation clarifies practical and procedural aspects of applying the FSR and is of considerable importance in particular for M&A transactions and public procurement procedures. The standard forms for merger notifications (“Form FS-CO) and notifications of public procurement procedures are included as annexes to the Implementing Regulation.

The Commission must now be notified of M&A transactions signed on or after 12 July 2023 and closed on or after 12 October 2023 that reach the applicable thresholds. If notification is required, a standstill obligation applies, i.e. such mergers may not be consummated while the Commission’s review is ongoing. The Commission can impose fines of up to 10% of total annual turnover for breaches of this standstill obligation.

Key points of the new Implementing Regulation

The following points are now of particular relevance to parties to M&A transactions:

  • In its Form FS-CO, the Implementing Regulation now contains various amounts of information or levels of detail required for different types of financial contributions from non-EU countries:
    • Comprehensive information requirements: These apply to financial contributions that are most likely to distort the internal market (Article 5(1)(a) to (d) of the FSR; “Article 5 - Contributions”). In addition, these must individually amount to at least EUR 1 million. The categories of Article 5 - Contributions (financial contributions to ailing undertakings, unlimited guarantees, export financing measures not in line with the applicable OECD Arrangement and financial contributions to facilitate a merger) have largely been adopted from EU State aid law. There, these categories are also considered to be particularly distortive of competition in principle. With regard to Article 5 - Contributions, the Form FS-CO requires parties to (i) answer extensive questions (including on the granting entity, the conditions and the purpose of the financial contribution) and (ii) submit extensive documentation on these financial contributions.
    • Limited information requirements: These apply to all other financial contributions that do not constitute Article 5 - Contributions. The prerequisite is that they (i) individually amount to at least EUR 1 million and (ii) together with other financial contributions from the same non-EU country amount to at least EUR 45 million. For these “minor” financial contributions, only a cumulative brief description of the purpose of the financial contribution and the granting entity must be provided for each type of financial contribution. Furthermore, only the range within which an aggregated value of the financial contributions per non-EU country falls must be reported.
    • No information requirementsFor (i) individual financial contributions of less than EUR 1 million (regardless of their nature) and (ii) financial contributions that do not constitute Article 5 - Contributions and that (together with all other financial contributions) do not amount to at least EUR 45 million from the same non-EU country, no information must be provided in the notification. The same applies to financial contributions granted through certain universal tax rules and tax reliefs for avoidance of double taxation as well as to the provision/purchase of goods/services (except financial services) at market terms in the ordinary course of business. In addition, special rules apply to the necessity of providing information in the context of investment funds. However, it cannot be ruled out that the Commission will examine such financial contributions in separate proceedings if it suspects a distortion of competition.
  • Please note: The simplifications do not apply with regard to the financial contribution threshold of EUR 50 million in the past three years. Companies must therefore record and take into account all financial contributions when assessing this threshold. Therefore, companies must still systematically record all financial contributions of all kinds from non-EU countries. The simplifications then take effect with regard to the level of detail to be provided in the notification.
  • Structured bidding processes: Here as well, the FSR will require less information, primarily in the preliminary phase of a structured bidding process:
    • In particular, it is no longer necessary to indicate the number of candidates contacted or candidates who have expressed interest and withdrawn. It is also no longer mandatory to submit a detailed description of a due diligence or complete due diligence reports.
    • However, summaries of due diligence reports, such as those provided to members of the management board or supervisory board, are still required. A detailed description of the structured bidding process and a description of the profiles of all candidates known to the notifying party/parties must also be provided.


The FSR and the now published Implementing Regulation present companies with additional difficult challenges in M&A transactions. Comprehensive information on financial contributions from non-EU countries is required both for the assessment of any notification requirements and for a notification, regardless of whether these are ultimately determined to be subsidies. If the relevant information is not available internally or is incomplete, there is a risk of significantly delaying or even completely jeopardising an M&A transaction.

In order to ensure their own “M&A readiness”, companies should therefore set up a suitable reporting system for all relevant stakeholders. In addition, in the case of M&A transactions that are due to take place soon, comprehensive contractual provisions should already be drafted now for any relevant FSR notification requirement (such as a closing condition or mutual information obligations). It is therefore advisable to draft clauses for such cases in advance. Finally, timely pre-notification contacts with the Commission can be very useful in upcoming M&A transactions (e.g. to discuss a waiver regarding certain information at an early stage).

With regard to the remaining uncertainties about how the FSR will actually be applied in practice, we expect that EU State aid law in particular can be relied on as a valid source. The topic remains challenging – we will continue to keep you informed and will be happy to answer any questions.