Insights

Last year, the European Union (EU) legislature adopted a far-reaching regulation aimed at tackling the distortive effects on EU markets of financial support provided by non-EU countries to undertakings active in the EU (Foreign Subsidies Regulation or FSR). However, the FSR left many procedural details to be hammered out by the European Commission (EC) in an Implementing Regulation, to be adopted before the FSR itself starts to apply in July 2023. On 6 February 2023, the EC launched a much-anticipated public consultation regarding its draft Implementing Regulation, including two annexes containing notification forms for concentrations and public procurements. Stakeholders have until 6 March 2023 to submit comments.

On October 28, 2022, the European Commission adopted a second amendment to its Temporary Framework for State aid measures to support the economy following Russia’s aggression against Ukraine (“TF”). The TF was set to expire on December 31, 2022. As the war in Ukraine continues to affect companies in the EU, the Commission has extended its application until December 31, 2023. In addition, the second amendment to the TF raises the ceilings for limited amounts of aid and provides for additional flexibility for liquidity support to energy utilities for their trading activities and for companies affected by rising energy costs. It also introduces means to support electricity demand reduction, in line with the recent Regulation (EU) 2022/1854 on an emergency intervention to address high energy prices. The changes reflect the growing concern of the EU institutions about the security of gas and electricity supply in Europe.

As we wrote in an earlier client alert, the European Commission proposed the FSR in May 2021 to close a regulatory gap and level the playing field between undertakings receiving subsidies from EU Member States, which are subject to strict state aid rules, and recipients of third-country subsidies, which so far escaped scrutiny. The proposal followed a public consultation on the European Commission’s June 2020 White Paper on Foreign Subsidies.