Alerts & Updates 16th Jan 2023

EU’s Foreign Subsidies Regulation : Levelling the Playing Field

Authors

Sanjay Notani Partner | Mumbai
Ambarish Sathianathan Partner | Mumbai
Harika Bakaraju Principal Associate | Mumbai
Divyashree Suri Senior Associate | Delhi NCR

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The European Union (EU) has a history of proactively framing laws governing emerging issues. The EU’s foreign subsidies regulation (FSR) is a more recent example of such proactive regulation. According to the EU, foreign subsidies can have distorting effects on the EU market. Accordingly, the FSR has been enacted to address distortions in the EU market due to foreign subsidies by a non-EU country to an entity engaging in any economic activity (for e.g., mergers and acquisitions, public procurement, sale of goods and services, and setting up of factories among others) in the EU.

Since the FSR has started applying from today i.e., July 12, 2023, the EU may be seen investigating distorting foreign subsidies. Entities engaging in economic activities in the EU must therefore begin assessing whether their operations are in any manner susceptible to the FSR and the redressive measures thereunder.

In this primer, ELP will explore the key aspects of the FSR, providing you with a comprehensive understanding of its scope, enforcement mechanisms, and implications for businesses operating within the EU. A high-level list of considerations for businesses to commence preparing for the FSR has also been provided.

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