UE regulation on foreign subsidies

With this regulation the European Commission controls, from 12th July 2023, subsidies granted by third UE States to companies, regardless its nationality, whose domicile is within the UE.

The objective of this Regulation is to resolve the disruptions caused by foreign subsides with the aim to guarantee the equality of competence conditions in the domestic market. It is focused on two areas: (i) subsidies that facilitate concentration operations with another EU company (M&A) and (ii) subsidies that facilitate the participation in public tenders within the EU (public tenders).

A foreign subsidy takes place when a third country provides, directly or indirectly, a financial contribution that confers an advantage to a company that exercises an economic activity in the domestic market.

It is deemed that this foreign subsidy disrupts the domestic market, when it has as a likely effect improving the competitive position of a company in the domestic market and where, as a result, competition in that market is, or is likely to be, adversely affected.

This regulation will be retrospectively applied in subsidies granted from 12 July 2018. Consequently, companies have to verify if they have received foreign subsidies from 12 July 2028 until today.


The Regulation affects all private and public companies with domicile within a UE state, which have been benefited from a foreign subsidy.

In particular, this affects companies which, having received subsidies from a third State, they participate in concentration operations or they participate in public tenders within EU. Those companies will be obliged to notify with prior notice these operations to the Commission, provided that they exceed certain thresholds, and wait for authorization or the deadlines provided in the Regulation before execute them.

The Regulation also empowers the Commission to investigate companies that have received any foreign subsidy over 200,000 euros during a consecutive 3-year period (below this threshold it considers that there is no disruption), although the Regulation itself states that disruption is unlikely to exist where the amount of the subsidy does not exceed 4 million euros.


Prior notification obligation. In the event of concentration operationsfacilitated by the reception of foreign subsidies, the Regulation establishes a mandatory notification prior to the implementation of the operation, when the following thresholds occur:

  • When one of the companies of the concentration is established in the EU and generates in the EU an aggregate turnover of at least 500 million euros; and
  • Any of the companies involved has received foreign subsidies of at least 50 million euros from third EU states in the previous three years.

Deadlines for processing the procedure. The Commission will have 25 days from receipt of the notification to take a decision on whether or not to start an in-depth investigation. If an in-depth investigation is opened, the Commission has 90 days to adopt its decision to authorise or prohibit the concentration or to take remedial actions. Silence is positive.

If the concentration subject to the obligation is not notified, or if it is executed against the decision of the Commission, the latter may order the dissolution of the concentration operation or the disposal of the acquired shares or assets in order to restore the prior situation, plus penalties of up to 10% of the turnover of the previous financial year. 

In addition, the Commission may require notification of concentrations that do not exceed the above thresholds, provided that they have not been implemented, if it suspects that the entities concerned have benefited from foreign subsidies within the 3-year period. The Commission may also examine the concentration ex officio if the companies concerned do not comply with their notification obligation. In ex post investigations, where there is no prior notice, the Commission may order the dissolution of concentrations and impose penalties.


It is understood that a foreign subsidy can cause market disruptions when it makes it possible for a company to submit an unduly advantageous tender in public procurement processes.

The Regulation requires prior notification when the following cumulative thresholds occur:

  • That the company that participates in the tender (including non-commercially autonomous subsidiaries and their holding companies) or its main suppliers or subcontractors (when these are participating in the tender) have received a foreign subsidy equal to or greater than 4 million euros in the previous three years; and
  • The estimated value of the public contract is equal to or higher than 250 million euros;
  • If the contract is divided into lots, a third condition applies: the cumulative value of the lots must be equal to or higher than 125 million euros.

For those not obliged to notify, there is an obligation to submit a declaration of foreign financial contributions received, confirming that they are not subject to the notification obligation.  In addition, the Commission may examine any tender where there is a suspicion of having received a foreign subsidy, prior to the award of the contract.

Companies and contracting authorities shall be obliged to not to execute or award the operations under investigation until the Commission has taken a decision on that matter or the deadlines for each procedure have elapsed.

Deadlines. The Commission will have 20 days from receipt of the notification to take a decision on whether or not to start an in-depth investigation. If an in-depth investigation is opened, the Commission will have 110 days to adopt its decision to authorise or prohibit the execution/award.

The Commission may impose penalties of up to 10% of their total turnover in the previous year if companies fail to notify foreign subsidies during the public tender procedure or attempt to avoid the notification requirements. 

The Commission also reserves the possibility to require the notification of subsidies that do not meet the above thresholds, provided that the contract has not been awarded, as well as to review ex post contracts already awarded, in which case the review will not lead to the annulment of the award or to the termination of the contract.


When the Commission verifies the existence of a foreign subsidy that disrupts the domestic market, on the basis of the results of its analysis, in cases of notification of concentration operationsor public tenders facilitated by foreign subsidies, the Commission will have the choice between:

  • To authorise the operation if it is deemed that the subsidies do not disrupt the competition.
  • To impose remedies or accept commitments to remedy the disruption (inter alia, dissolution of the concentration or repayment of the subsidy).
  • To prohibit the operation or award in question if it considers that it is facilitated by foreign subsidies and its disruption effects cannot be offset by other measures or companies.

The information contained in this note should not in itself be considered as specific advice on the matter under discussion, but only as a first approach to the subject matter, and it is therefore advisable that the recipients of this note obtain professional advice on their specific case before taking specific measures or actions.

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