Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on foreign subsidies distorting the internal market
Date: 2021-05-05
Institutions: Directorate-General for Competition, European Commission
Subjects: EU competition policy, foreign aid, foreign capital, foreign investment, market supervision, public procurement, restriction on competition, single market, third country

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   EUROPEAN COMMISSION  Brussels, 5.5.2021  COM(2021) 223 final 2021/0114 (COD)  Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on foreign subsidies distorting the internal market {SWD(2021) 99 final} - {SWD(2021) 100 final} - {SEC(2021) 182 final}  
 
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

The  European  Union  (EU)  is  closely  intertwined  with  the  global  economy.  With  trade  in 
goods and services worth EUR 5 984 billion in 20191, it accounts for 16.4% of overall global 
trade. As a result, trade accounts for almost 35% of the EU’s gross domestic product (GDP), 
with  35 million  jobs  in  the  EU  dependent  on  exports.  The  flow  of  products,  services  and 
capital into and out of the EU contribute to its growth by enhancing competitiveness, creating 
jobs, stimulating innovation and opening up new markets2. 

In 2017 the EU28 was the destination for a third of the world’s investment stocks and home to 
roughly 100 000 companies owned by foreign entities3. Foreign direct investment (FDI)  is a 
welcome source of employment (16 million jobs4), growth and competitiveness. 

A strong, open and competitive single market enables both European and foreign companies 
to  compete  on  merit  in  as  far  as  a  level  playing  field  in  the  internal  market  is  ensured. 
Accordingly,  on  10  March  2020  the  Commission  presented  a  new  industrial  strategy  for 
Europe5,  which  mapped  out  a  path  whereby  EU  industry  could  lead  the  green  and  digital 
transitions  on  the  basis  of  competition,  open  markets,  world-leading  research  and 
technologies,  and  a  strong  single  market.  The  EU  is  pursuing  a  model  of  open  strategic 
autonomy6  by  shaping  the  system  of  global  economic  governance  and  developing  mutually 
beneficial  bilateral  relations,  while  protecting  its  internal  market  from  unfair  and  abusive 
practices.  The  Communication  on  the  trade  policy  review  adopted  on  18  February  2021  set 
the  direction  for  an  open,  sustainable  and  assertive  trade  policy,  building  on  openness  as  a 
strategic choice while also being equipped with the tools to combat unfair trading practices.7 

In recent years, foreign subsidies appear in some instances to have had a distortive impact on 
EU’s internal market, creating an uneven playing field for competition. While there is still a 
general  lack  of  reliable  data  on  subsidies  granted  by  third  countries,  there  is  a  growing 

1  DG Trade Statistical Guide, August 2020, excluding intra-EU trade;  
https://trade.ec.europa.eu/doclib/docs/2013/may/tradoc_151348.pdf  

2  Report from the Commission on the implementation of the trade policy strategy – Trade for all: delivering a 

progressive trade policy to harness globalisation (COM(2017) 491 final). 

3  Eurostat,  Foreign  AffiliaTes  Statistics  (FATS),  Foreign  control  of  enterprises  by  economic  activity  and  a 
selection  of  controlling  countries  (from  2008  onwards)  [fats_g1a_08].  The  100 000  figure  includes  the 
United  Kingdom  as  part  of  the  EU-28.  Preliminary  data  shows  that  this  figure  is  not  likely  to  change 
significantly  for the EU-27. In 2018, an estimated 84 000 enterprises in the EU-27  were owned by  foreign 
entities  (excluding  the  UK),  while  in  2015-2017  there  were  around  18 000  UK-owned  enterprises  in  other 
EU-27 countries. 

4  Commission  staff  working  document  on  Foreign  direct  investment  in  the  EU  (SWD(2019) 108  final), 
following  up  on  the  Commission  Communication  Welcoming  foreign  direct  investment  while  protecting 
essential interests (13 September 2017). 

5  Commission  Communication,  A  new  industrial  strategy  for  Europe  (COM(2020) 102  final),  as  updated  in 
2021.  See  also  the  Commission  Communication,  The  European  economic  and  financial  system:  fostering 
openness, strength and resilience (COM(2021) 32). 

6  Commission  Communication,  Europe’s  moment:  repair  and  prepare 

the  next  generation 
(COM(2020) 456  final).  See  also  the  Commission  Communication,  The  European  economic  and  financial 
system: fostering openness, strength and resilience (COM(2021) 32). 

for 

7  Commission  Communication,  Trade  Policy  Review  –  An  Open,  Sustainable  and  Assertive  Trade  Policy 

(COM(2021) 66 final).  

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number of instances in which foreign subsidies seem to have facilitated the acquisition of EU 
undertakings,  influenced  investment  decisions,  distorted  trade  in  services  or  otherwise 
influenced  the  behaviour  of  their  beneficiaries  in  the  EU  market,  to  the  detriment  of  fair 
competition8. 

In this context,  foreign subsidies can take different  forms,  e.g. zero-interest  loans, unlimited 
State  guarantees,  tax  exemptions  or  reductions  in  respect  of  foreign  investments  or  trade  or 
dedicated State funding. In many cases, they would be problematic if granted by EU Member 
States and assessed under EU State aid rules. 

Since  2017,  the  EU  has  been  actively  engaged  in  trilateral  talks  with  the  United  States  and 
Japan  to  improve  multilateral  cooperation  in  a  number  of  key  areas.  In  June  2018,  the 
European Council gave the Commission a mandate ‘to pursue WTO modernisation in pursuit 
of  the  objectives  of  making  the  WTO  more  relevant  and  adaptive  to  a  changing  world,  and 
strengthening  the  WTO’s  effectiveness’9.  In  January  202010,  senior  trade  representatives  of 
the  EU,  US  and  Japan  agreed  on  the  need  to  strengthen  World  Trade  Organization  (WTO) 
rules on industrial subsidies. In this context, the EU intends to start work on developing WTO 
rules to  address  a range  of competitive distortions due to  state intervention  in  the economy, 
including industrial subsidies, as outlined in  the Annex to  the Communication on the Trade 
Policy Review.11 

Considering  the  challenge  to  find  a  multilateral  solution  to  subsidies  within  a  reasonable 
timeframe, the Commission committed (as part of the new industrial strategy for Europe) to 
explore  how  best  to  strengthen  the  EU’s  anti-subsidy  mechanisms  and  tools12.  On 
17 June 2020,  the  Commission  adopted  a  white  paper  on  foreign  subsidies13  to  explore  the 
issue,  launch  a  public  debate  and  propose  possible  solutions.  The  white  paper  and,  in  more 
detail, Section 2 of the impact assessment report accompanying the present proposal describe 
a  legislative  gap  in  EU  competition,  trade  and  public  procurement  rules,  which  effectively 
prevents  the  EU  from  taking  action  when  foreign  subsidies  cause  distortions  in  the  internal 
market including by financing concentrations or procurement bids.  

The  white  paper  notes  that,  while  the  granting  of  support  by  Member  State  authorities  is 
subject  to  EU  State  aid  control,  no  comparable  regime  is  in  place  for  support  granted  by 
non-EU  countries.  This  puts  undertakings  that  engage  in  an  economic  activity  in  the  EU 
without subsidies at a disadvantage vis-à-vis beneficiaries of foreign subsidies. 

The  white  paper  further  identified  problems  linked  to  access  to  EU  funding  by  operators 
receiving  foreign  subsidies,  which  could  distort  the  competition  for  EU  funds.  The  impact 
assessment  accompanying  this  proposal  notes  that  any  Union  measures  addressing  the 

8  A recent report by the European Court of Auditors finds that  certain subsidies granted by the Chinese state 
would constitute State aid if granted by an EU Member State, and notes that this ‘difference in treatment can 
distort competition in the EU’s internal market’; European Court of Auditors, ‘The EU’s response to China’s 
state-driven investment strategy’, Review 03 (2020); 
https://www.eca.europa.eu/Lists/ECADocuments/RW20_03/RW_EU_response_to_China_EN.pdf 

9  European Commission, Concept paper: WTO modernisation (September 2018). 
10  Joint Statement of the Trilateral Meeting of the Trade Ministers of Japan, the United States and the European 

Union (Washington, D.C., 14 January 2020). 

11  Annex  to  the  Commission  Communication,  Trade  Policy  Review  –  An  Open,  Sustainable  and  Assertive 

Trade Policy (COM(2021) 66 final). 

12  A new industrial strategy for Europe (COM(2020) 102 final), as updated in 2021. 
13  White paper on levelling the playing field as regards foreign subsidies (COM(2020) 253 final). 

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distorting  effects  of  foreign  subsidies  in  public  procurement  will  apply  to  the  EU  budget 
expenditure  under  shared  management  distributed  through  public  procurement.  The  direct 
management of EU funds is subject to the EU’s Financial Regulation. The Commission  will 
explore  the  possibility  to  propose  to  the  co-legislators  amendments  to  the  Financial 
Regulation during the next revision, to take into account the impact of foreign subsidies. To 
the extent EU funding is  distributed through public procurement  under shared management, 
possible  distortions  would  be  addressed  through  the  public  procurement  provisions  of  this 
proposal. 

Recently,  several  Member  States  have  made  suggestions  for  action  aimed  at  addressing  the 
possible  distortions  from  foreign  subsidies14.  In  addition, 
the  German  Monopolies 
Commission  has  proposed  a  foreign  State  aid  instrument  to  address  the  negative  effects  of 
foreign subsidies on the internal market15. 

The  co-legislators  have  also  raised  the  issue  of  foreign  subsidies  on  several  occasions.  The 
Council referred to the Commission’s white paper in its conclusions of 11 September 202016 
and,  in  its  conclusions  of  1-2  October  202017,  the  European  Council  called  for  ‘further 
instruments to address the distortive effects of foreign subsidies in the single market’.  In its 
February  2020  report  on  competition  policy18,  the  European  Parliament  called  on  the 
Commission  to  ‘investigate  the  option  to  add  a  pillar  to  EU  competition  law  that  gives  the 
Commission  appropriate  investigative  tools  in  cases  where  a  company  is  deemed  to  have 
engaged  in  distortionary  behaviour  due  to  government  subsidies  or  to  have  made  excessive 
profits  based  on  a  dominant  market  position  in  its  home  country’.  In  a  joint  letter  to 
Commission  Executive  Vice-Presidents  Vestager  and  Dombrovskis  and  Commissioner 
Breton19, a group of 41 Members of the European Parliament expressed strong support for an 
instrument  to  tackle  ‘companies  from  third  countries  that  have  received  substantial  state 
support’. 

As  announced  in  the  Commission’s  work  programme  for  2020-2021,  this  proposal  for  a 
regulation  therefore  sets  out  the  features  of  a  new  tool  to  address  the  regulatory  gap  and  to 
ensure a level playing field in the internal market. It is also mentioned under point 3.2.6 of the 

14  The Netherlands has suggested targeting undertakings that receive foreign subsidies or have an unregulated 

dominant position in a non-EU market, in order to prevent potentially disruptive behaviour; 
https://www.permanentrepresentations.nl/documents/publications/2019/12/09/non-paper-on-level-playing-
field. 
France, Germany, Italy and Poland have called for the Union’s competition rules to be adapted, in particular 
to take account of the possible distortions created by foreign State support and protected markets; 
https://g8fip1kplyr33r3krz5b97d1-wpengine.netdna-ssl.com/wp-content/uploads/2020/02/Letter-to-
Vestager.pdf. 

15  Biennial Report XXIII of the Monopolies Commission (‘Competition 2020’);   

https://www.monopolkommission.de/images/HG23/Main_Report_XXIII_Chinese_state_capitalism.pdf  
16  Council  of  the  European  Union,  Conclusions  on  a  deepened  single  market  for  a  strong  recovery  and  a 

competitive, sustainable Europe (11 September 2020); 
https://www.consilium.europa.eu/media/45641/council-conclusions-on-a-deepened-single-market-for-a-
strong-recovery-and-a-competitive-sustainable-europa.pdf  

17  Special meeting of the European Council (1 and 2 October 2020) – Conclusions (2 October 2020); 

https://www.consilium.europa.eu/media/45910/021020-euco-final-conclusions.pdf  

18  European Parliament, Report on competition policy — annual report 2019 (A9-0022/2020; 25.2.2020);   

https://www.europarl.europa.eu/doceo/document/A-9-2020-0022_EN.pdf  

19  Letter  to  EU  telecom  and  trade  ministers  and  Commissioners  Breton,  Vestager  and  Dombrovskis 

(14.10.2020);  
https://reinhardbuetikofer.eu/2020/10/14/letter-to-eu-telecom-and-trade-ministers-and-to-european-
commissioners-thierry-breton-margrethe-vestager-and-valdis-dombrovskis/ 

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Communication on the trade policy review on strengthening the focus on implementation and 
enforcement and ensuring a level playing field. 

• 

Consistency with existing policy provisions in the policy area 

At  present,  there  are  no  specific  EU  rules  to  address  the  distortive  effects  that  foreign 
subsidies  may  have  on  the  internal  market.  While  the  EU  has  a  system  of  State  aid  control 
enshrined  in  Articles 107  and 108  of  the  Treaty  on  the  Functioning  of  the  European  Union 
(TFEU), it applies only where an EU Member State grants financial support to an undertaking 
or  group  of  undertakings,  giving  rise  to  an  advantage  that  distorts  competition  and  affects 
trade  between  Member  States.  The  EU  antitrust  rules20  prohibit  agreements  or  concerted 
practices of undertakings having the object or effect of distorting competition in the internal 
market,  and  abuses of dominant  positions by undertakings irrespective of their forms  or the 
way they are financed. The EU merger rules21 provide for a system of prior notification and 
approval for concentrations entailing permanent changes of control over undertakings above 
certain  EU  turnover  thresholds  irrespective  of  whether  or  not  such  concentrations  may  be 
financed by way of foreign subsidies granted.  

This proposal addresses distortions on the internal market caused by foreign subsidies that fall 
outside  the  EU  State  aid,  merger  control  and  antitrust  rules.  It  complements  and  is  fully 
coherent with the existing competition rules. It addresses the detrimental effects of distortive 
foreign  subsidies  in  the  cases  of  concentrations  and  public  procurement  ex ante,  without 
limiting the EU’s ability to intervene  ex post in other market situations, including in smaller 
concentrations and public procurement procedures. 

The proposal is fully coherent with the EU public procurement  rules. The EU Directives on 
public procurement22 cover tenders that are expected to be worth more than a given amount. 
They  are  designed  to  ensure  a  competitive,  open  and  well-regulated  procurement  market. 
They also ensure that EU companies have access to rapid and effective review.  The present 
proposal is concerned specifically with distortions that foreign subsidies may cause to public 
procurement procedures within the EU. It therefore complements the existing rules. 

• 

Consistency with other Union policies 

The  proposal  is  coherent  with  the  new  industrial  strategy  and  the  trade  policy  review  in  its 
contribution  to  ensuring  the  EU’s  competitiveness  and  open  strategic  autonomy,  by 
strengthening its anti-subsidy mechanisms and tools. The proposal also takes into account the 
objectives  of  the  European  Green  Deal.  It  will  constitute  a  coherent,  effective  and 
proportionate framework for addressing distortions in the internal market that currently cannot 
be tackled. 

20  Articles 101 and 102 TFEU. 
21  Council  Regulation  (EC)  No  139/2004  of  20  January  2004  on  the  control  of  concentrations  between 

undertakings (OJ L 24, 29.1.2004, p. 1). 

22  Directive  2014/24/EU  of  the  European  Parliament  and  of  the  Council  of  26  February  2014  on  public 

procurement and repealing Directive 2004/18/EC, OJ L 94, 28.3.2014, p. 65.  
Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement 
by  entities  operating  in  the  water,  energy,  transport  and  postal  services  sectors  and  repealing  Directive 
2004/17/EC, OJ L 94 28.3.2014, p. 243 
Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of 
concession contracts OJ L 94 28.3.2014, p. 1 

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This  proposal  complements  the  amended  proposal  for  the  International  Procurement 
Instrument  (IPI)23  aimed  at  encouraging  trading  partners  to  negotiate  with  the  EU  on  the 
opening of their procurement markets to EU businesses. The IPI proposal, as presented by the 
Commission,  aims  at  improving  access  to  public  procurement  markets  outside  the  EU. 
However, it will not tackle distortions of procurement processes in the internal market arising 
from foreign subsidies granted to undertakings participating in EU procurement markets24.  

The proposal  is  coherent with  EU trade policy  and complements existing trade instruments. 
The WTO Subsidies and Countervailing Measures (SCM) Agreement (at  multilateral  level), 
bilateral  free-trade  agreements  and  the  EU  anti-subsidy  regulation25  discipline  the  use  of 
subsidies in  their scope and regulate actions that can be taken to  counter the effect  of those 
subsidies. Measures to counteract unfair practices usually take the form of extra import duties 
to eliminate the injury of the subsidisation granted by other WTO countries. However, the EU 
anti-subsidy rules only address the injury caused by the import of goods into the EU that have 
benefitted from a foreign subsidy. At international level, the EU can bring litigation against a 
WTO member for breaches of the SCM Agreement,  but  the scope of the Agreement is  also 
limited  to  trade  in  goods.  The  WTO  General  Agreement  on  Trade  in  Services  (GATS) 
contains an inbuilt mandate to develop rules for subsidies in the area of trade in services, but 
no such rules have been developed to date. 

This  proposal  complements  the  FDI  Screening  Regulation26,  the  purpose  of  which  is  to 
determine the likely impact of FDI on security and public order by considering its effects on, 
among other things, critical infrastructure, technologies and inputs. In contrast, this proposal 
specifically  tackles  the  issue  of  distortions  to  the  level  playing  field  caused  by  foreign 
subsidised investments in the internal market, including strategic industries, critical assets and 
technologies. 

The proposal is aligned with other EU instruments, including the EU Charter of Fundamental 
Rights. 

The proposal is also coherent with the targeted and tailor-made regulation of specific sectors, 
including the maritime technology and the aviation sectors27. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The proposed regulation would impose disciplines with regard to foreign subsidies that have a 
distortive impact on the internal market, including situations where a subsidised investor plans 

23  Amended  proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  the  access  of 
third-country  goods  and  services  to  the  Union’s  internal  market  in  public  procurement  and  procedures 
supporting  negotiations  on  access  of  Union  goods  and  services  to  the  public  procurement  markets  of  third 
countries (COM(2016) 34 final, 29 January 2016). This proposal is being discussed in the Council. 

24  Following the call by the Commission and the European Council in March 2019 to resume the discussions, 
the  co-legislators  are  currently  engaged  in  constructive  discussions  on  the  IPI,  on  the  basis  of  the  2016 
amended legislative proposal from the Commission. 

25  Regulation (EU) 2016/1037 of the European Parliament and of the Council on protection against subsidised 

imports from countries not members of the European Union (OJ L 176, 30.6.2016, p. 55). 

26  Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a 

framework for the screening of foreign direct investments into the Union (OJ L 79I , 21.3.2019, p. 1). 

27  As covered by Regulation (EU) 2016/1035 (which however does not apply as the conditions in Article 18 are 

not fulfilled), Regulation (EC) 1008/2008 and Regulation (EU) 2019/712. 

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to acquire an EU target or participate in an EU public procurement procedure. Article 207(1) 
of  the  Treaty  on  the  Functioning  of  the  European  Union  (TFEU)  defines  the  scope  of  the 
Union’s common commercial policy as encompassing inter alia measures to be taken ‘in the 
event of subsidies’, ‘foreign direct investment’ and trade in goods and services. Consequently, 
the proposed regulation falls largely within the scope of Article 207(2) TFEU, which provides 
for  the  adoption  of  measures  defining  the  framework  for  implementing  the  common 
commercial policy.  

At the same time, the proposed regulation may apply as well to certain activities performed by 
an  entity  already  established  in  one  Member  State  in  another  Member  State,  such  as  the 
acquisition of another entity in another Member State or the participation in a public tender in 
another  Member  State.  To  that  extent,  the  proposed  regulation  may  affect  the  right  of 
establishment and the free movement of goods and services within the Union. In view of that 
the proposal should be based as well on Article 114 TFEU, which provides for the adoption of 
measures for the approximation of measures of the Member States which have as their object 
the  establishment  or  functioning  of  the  internal  market.  While  to  date  there  are  no  national 
rules dealing with  foreign subsidies, several  Member States28 have indicated that they see a 
need to address the distortions caused by foreign subsidies. It cannot be ruled out that, in the 
absence  of  an  EU  action,  at  least  some  Member  States  could  decide  to  adopt  national 
legislation. Consequently, and in order to avoid unnecessary obstacles that could result from 
the  disparity  of  national  laws,  the  Commission  should  propose  EU-wide  legislation  on 
distortive foreign subsidies.  

It is therefore proposed that the proposal be based on Articles 207 and 114 TFEU. 

• 

Subsidiarity (for non-exclusive competence)  

Trade policy is an exclusive competence of the EU. Consequently, if the proposal were based 
solely on Article 207 TFEU, the EU institutions, rather than the Member States’ governments, 
could put in place new legislation in relation to distortive foreign subsidies. 

On  the  other  hand,  the  internal  market  is  an  area  of  shared  competence.  Therefore,  for  a 
proposal based on Article 114 TFEU, the Member States can also legislate and adopt legally 
binding acts,  unless the  objectives  of the proposal  could  be better  achieved at  EU level.  To 
date, no Member State has adopted national legislation to address potential distortive effects 
of  foreign  subsidies.  Furthermore,  several  Member  States  have  instead  called  on  the 
Commission to propose draft legislation in this area29. 

The  objectives  of  the  proposal  cannot  be  achieved  by  Member  States  acting  alone.  Foreign 
subsidies cause distortions on the internal market, including in the context of acquisitions of 
EU targets and of public procurement. The situation is comparable to State aid granted by EU 
Member  States,  which  by  nature  has  effects  on  more  than  one  Member  State.  Likewise, 
distortions  caused  by  foreign  subsidies  may  have  a  Union  dimension,  affecting  several 
Member States. 

Addressing  distortive  foreign  subsidies  at  EU  level  allows  potential  beneficiaries  of  foreign 
subsidies to know in advance the rules that the Commission will use to assess the existence of 

28  Among others The Netherlands, France, Germany, Poland and Italy 
29  See, for example, above-mentioned contributions from the Netherlands, France, Germany, Poland and Italy.  

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foreign subsidies and possible distortions they may cause. This guarantees predictability and 
improves the legal certainty of the system across Member States. 

• 

Proportionality 

The  proposal  aims  to  protect  the  level  playing  field  in  the  internal  market  so  that  it  is  not 
distorted by foreign subsidies. It therefore focuses on two issues: identifying distortive foreign 
subsidies and remedying the distortions they cause. 

For  concentrations  and  public  procurement,  the  proposal  involves  a  system  of  ex ante 
notification of the largest and potentially most distortive cases. The ex ante approach ensures 
the  systematic  identification  of  distortive  foreign  subsidies  in  situations  where  the  highest 
economic value is at stake. In all other market situations, including smaller concentrations and 
smaller  procurement  procedures,  such  subsidies  are  subject  to  an  ex officio  procedure  that 
enables  the  Commission  to  focus  on  the  most  relevant  cases.  Based  on  relevant  market 
information, the supervisory authority will then assess the degree of distortion. In any event, 
foreign subsidies below EUR 5 million are unlikely to be distortive. 

The  redressive  measures  in  the  proposal  are  based  on  measures  applied  in  EU  State  aid 
control  to  remove  the  distortive  effect  of  State  aid.  As  the  potentially  distortive  impact  of 
foreign subsidies on the internal market is similar to that of State aid, the State aid toolbox of 
remedies  provides  an  efficient  set  of  measures  to  remedy  distortions  caused  by  foreign 
subsidies.  In the  case of large  concentrations and large procurement procedures, the  ex ante 
approach ensures that measures can be decided before the transactions are closed, which gives 
legal certainty to the undertakings concerned. 

The  measures  in  the  proposal  are  proportionate,  since  they  achieve  their  objective  by 
imposing  a  burden,  in  a  targeted  manner,  only  on  undertakings  engaged  in  an  economic 
activity  in  the  internal  market  that  receive  foreign  subsidies.  The  proposal  requires  the 
cooperation  of  the  companies  under  investigation,  but  the  administrative  costs  will  be 
reasonable and proportionate. The costs will imply some resources to prepare notifications of 
large  subsidised  concentrations  or  public  procurement  procedures,  communicating  with  the 
Commission and responding to requests for information. 

• 

Choice of instrument 

Only a legislative instrument can effectively address the problems identified. A regulation is 
necessary,  as  it  is  directly  applicable  in  Member  States,  establishes  the  same  level  of  rights 
and obligations for private parties, and enables the coherent and effective application of rules 
across the EU. This is the most suitable instrument for addressing the potential distortions of 
the internal market by foreign subsidies. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EVALUATIONS, 

EX POST 

OF 

STAKEHOLDER 

Stakeholder consultations 

The Commission consulted widely30 on the proposal: 

30  A detailed overview of the results of the consultations is presented in  Annex 2 and  Annex 6 to the impact 

assessment. 

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–  on  17  June  2020,  it  adopted  and  published  a  white  paper  on  foreign  subsidies, 
which  launched  a  14-week  public  consultation  that  finished  on  23  September 
202031; 

–  on  6 October 2020,  it  opened  a  consultation  to  stakeholders  on  an  inception 
impact  assessment  outlining  possible  policy  options,  their  potential  impacts  and 
other elements to be assessed in a detailed impact assessment report; 

–  between  October  2020  and  January  2021,  it  organised  a  number  of  bilateral 
targeted consultations with the most relevant stakeholder representatives32; and 

–  it carried out a structured dialogue with Member States, notably through Council 
working  parties,  the  public  procurement  expert  group,  and  bilateral  and 
multilateral  exchanges  and  conferences  contributed  to  the  design  of  policy 
options. 

In general, the public consultations showed strong support for intervention to tackle distortive 
foreign subsidies in the internal market. Almost all respondents who provided feedback on the 
inception impact assessment supported legislative action at EU level, possibly complemented 
by international rules. 

The  replies  received  in  the  consultation  on  the  white  paper  were  highly  relevant  for  the 
drafting of the proposal. Almost all EU stakeholders, including Member States, welcomed the 
initiative  and  agreed  on  the  need  for  action.  The  majority  agreed  with  the  scope  of  the 
approach outlined in the white paper, but stressed the need for a proportionate measure so as 
not  to  stifle  foreign  investment,  a  concern  echoed  also  by  non-EU  stakeholders.  Many 
respondents highlighted the need to deal with the lack of transparency of foreign subsidies. 

To  address  distortive  foreign  subsidies  while  minimising  the  administrative  burden  on 
companies and public authorities, it is proposed that the notification thresholds for subsidised 
concentrations and public procurement procedures be set relatively high, in order to capture 
only  the  potentially  most  distortive  subsidies.  The  Commission  can  pursue  cases  below  the 
thresholds on its own initiative. Similarly, to increase legal certainty for companies engaged 
in economic activity in the EU, it is proposed that a minimal level be set below which foreign 
subsidies  are  unlikely  to  distort  the  internal  market.  This  will  have  a  positive  impact 
particularly on SMEs. Given the numerous requests for consistency in the application of the 
instrument, it is proposed that the Commission be responsible for enforcing the regulation. 

In addition, the feedback in the targeted consultations was used to generate examples of types 
of subsidy, sectors affected and concrete distortive effects. These were discussed in the impact 
assessment and used to shape the proposal. 

• 

Collection and use of expertise 

This initiative is supported by an impact assessment. In addition, the Commission carried out 
several consultations in 2020 (see above). In-house economic research by the Joint Research 
Centre  further  informed  the  impact  assessment.  Member  States  were  consulted  in  several 
meetings  of  the  Council  working  parties  on  competition  and  public  procurement,  and  in 
expert group meetings. Finally, a number of Member States’ position papers on dealing with 

31  https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12621-Addressing-distortions-

caused-by-foreign-subsidies  

32  https://ec.europa.eu/competition/international/overview/foreign_subsidies.html 

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foreign  subsidies33  and  several  reports  and  studies34  contributed  to  the  design  of  the 
instrument. 

• 

Impact assessment 

The  impact  assessment  underpinning  the  proposal  was  considered  by  the  Commission’s 
Regulatory  Scrutiny  Board,  which 
issued  a  positive  opinion  with  reservations  on 
5 March 2021.  The  Board’s  opinion,  its  recommendations  and  an  explanation  of  how  they 
have been taken into account are included in Annex 1 to the impact assessment accompanying 
this proposal. Annex 3 to the impact assessment provides an overview of who will be affected 
by this proposal and how. 

The Commission examined various policy options for achieving the general objective of the 
initiative, i.e. to ensure a level playing field in the internal market for companies that receive 
foreign subsidies and those that do not: 

Option 1 —   do nothing (status quo); 

Option 2 —  

issue  guidance  on  what  information  on  public  support  to  submit  when 
notifying an acquisition; 

Option 3 —   amend existing legislation; and  

Option 4 —   develop a new EU legal instrument with alternatives for various parameters.  

The  inception  impact  assessment  report  proposed  a  fifth  option,  which  entailed  changing 
international  rules.  The  impact  assessment  report  no  longer  presented  such  fifth  option  and 
instead included its substantive elements in the baseline scenario, as the Commission will in 
any  event  pursue  such  policy  initiative,  namely  to  aim  to  promote  the  development  of 
international rules to address negative impacts of subsidies. Options 2 and 3 were discarded at 
a  preliminary  stage,  as  they  were  unlikely  to  be  effective.  Consequently,  only  option 4  was 
considered in more detail. 

Option  4 proposed several  alternatives that  were  analysed. These alternatives concerned the 
following parameters:  

i) investigative approach;  

ii) competence level;  

iii) threshold below which foreign subsidies would not be considered distortive;  

iv) assessment criteria;  

v)  a balancing test, allowing to take into account negative and positive effects; and  

vi) redressive measures.  

Based  on  the  assessment  of  the  impacts  of  option  4,  the  sub-options  relating  to  the  above 
parameters  were  combined  to  form  possible  policy  packages  for  all  three  areas  in  which 

33  See footnote 15. 
34  Biennial Report XXIII of the Monopolies Commission (‘Competition 2020’);   

https://www.monopolkommission.de/images/HG23/Main_Report_XXIII_Chinese_state_capitalism.pdf  
Mercator Institute for China Studies (MERICS), Made in China 2025: The making of a high-tech superpower 
and consequences for industrial countries, MERICS Papers on China No 2 (December 2016);   
https://merics.org/sites/default/files/2020-04/Made%20in%20China%202025.pdf 

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distortive  subsidies  can  be  found,  i.e. concentrations,  public  procurement  procedures  and 
other market situations. 

The preferred option for each of the areas can be presented as a three-tiered investigative tool 
with the following components: 

  Component 1: A notification-based investigative tool for concentrations where the 
turnover  of  the  EU  target  exceeds  EUR 500 million  and  the  foreign  financial 
contributions exceed EUR 50 million; 

  Component  2:  A  notification-based  investigative  tool  for  bids  in  public  tenders 

with a contract value above EUR 250 million; and 

  Component 3: An ex officio investigative tool for all other market situations and 
for  concentrations  and  public  procurement  procedures  below  the  thresholds  for 
components 1 and 2. 

It  is  proposed  that  the  Commission  be  the  authority  enforcing  the  regulation.  Foreign 
subsidies below EUR 5 million are considered unlikely to be distortive. 

The preferred option largely corresponds to the approach presented in the  white paper, with 
two main exceptions35: 

  while  the  white  paper  envisaged  a  role  for  Member  States  in  scrutinising  public 
procurement  procedures,  the  proposal  involves  enforcing  all  components  at  EU 
level. This responds to widespread stakeholder concern that a new instrument on 
foreign  subsidies  would  be  applied  inconsistently  across  Member  States  and 
overburden national authorities 36 ; and 

  the  preferred  option  includes  more  detail  than  the  white  paper,  notably  on 
notification thresholds and the threshold below which foreign subsidies would be 
considered  not  to  distort  the  internal  market.  Such  thresholds  also  respond  to 
widespread stakeholder concerns about administrative burden and are in line with 
feedback from several stakeholders37 that the threshold below which subsidies are 
considered  non-distortive  should  be  higher  than  EUR 200 000  over  a  3-year 
period, as initially proposed. 

The  ex ante  notification  for  the  largest  and  potentially  most  distortive  cases  will  ensure 
systematic  identification  of  distortive  foreign  subsidies  in  situations  of  highest  economic 
value.  For  all  other  market  situations  (including  smaller  concentrations  and  smaller 
procurement  procedures),  distortive  foreign  subsidies  would  be  identified  in  an  ex officio 
procedure. This approach enables the supervisory authority to focus its attention on the most 
relevant  cases.  The  preferred  option  also  provides  for  an  effective  toolbox  of  redressive 
measures to remedy the distortion caused by foreign subsidies. 

35  While some stakeholders raised doubts about the approach presented in the white paper, the majority of EU 
stakeholders  (Member  States  and  other  stakeholders)  and  some  non-EU  stakeholders  support  the  initiative 
(see contributions referenced in Annex 2 and Annex 6 to the impact assessment). 

36  See  e.g.  the  contributions  of  the  Netherlands,  European  Services  Forum  (ESF),  European  Semiconductor 
Industry  Association (ESIA), Government Experts Group on Public Procurement and other stakeholders in 
Annex 2 and Annex 6 to the impact assessment. 

37  e.g. Czechia, Poland, European Round Table for Industry, Confederation of Danish Industry, Bundesverband 

der Deutschen Industrie, Eurometaux. 

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The benefits of the preferred option are expected to include a level playing field in the internal 
market  between  companies  receiving  foreign  subsidies  and  those  that  do  not.  This  will 
improve the competitiveness of the latter. Businesses, especially those receiving large foreign 
subsidies,  may  incur  certain  administrative  costs  when  preparing  notifications  or  complying 
with information requests. However, these costs are reasonable and proportionate. 

The  impacts  of  the  policy  options  on  different  categories  of  stakeholders  are  explained  in 
detail  in  Annex  3  to  the  impact  assessment.  To  the  extent  possible,  the  assessment  is  both 
qualitative  and  quantitative.  In  view  of  the  high  threshold  below  which  subsidies  would  be 
considered not to distort the internal market and the high proposed notification thresholds for 
subsidised concentrations and public procurement transactions, this initiative will not impose 
an additional burden on SMEs. The burden on the Commission of implementing this initiative 
is  reasonable  (mainly  redeployment  or  creation  of  posts)  in  the  light  of  the  benefits  for  the 
economy. 

• 

Regulatory fitness and simplification 

The proposal is not linked to REFIT, as it concerns an area in which there is currently no EU 
(or national) legislation. 

In  view  of  the  high  notification  thresholds  for  subsidised  concentrations  and  public 
procurement  transactions,  this  proposal  lays  down  measures  that  will  apply  mainly  to 
recipients of large foreign subsidies, which are also likely to be the most distortive. This will 
limit the administrative burden on undertakings and public authorities. In addition, because of 
the  high  proposed  notification  thresholds,  SMEs  will  not  be  impacted  by  additional 
administrative burdens as a result of having to submit notifications. 

By  remedying  the distortive effects  of foreign subsidies  in  the internal  market,  the proposal 
will create a level playing field for companies that receive foreign subsidies and those that do 
not,  thus  improving  the  competitiveness  of  companies  in  the  EU.  In  view  of  the  limited 
administrative burden on undertakings and the clear framework that this proposal establishes, 
the risk that the new instrument will negatively impact trade and investment flows is deemed 
low.  Apart  from  the  risk  due  to  administrative  burden,  the  new  instrument  may  reduce  the 
number  of  concentrations  by  preventing  subsidised  concentrations.  However,  this  is  the 
intended effect and should be outweighed by the benefits of restoring undistorted price signals 
and company valuations, and facilitating concentrations that were previously hindered. 

The proposal is internet-ready and appropriate for both physical and digital environments. 

• 

Fundamental rights 

The proposal is aligned with the EU Charter of Fundamental Rights and respects the freedom 
to  conduct  business.  The  introduction  of  a  new  legislative  instrument  to  tackle  distortive 
foreign  subsidies  is  subject  to  ensuring  full  respect  for  the  fundamental  rights  to  fair 
proceedings and good administration. 

When acting under the legislative instrument, the Commission’s investigation powers would 
be subject to the full scope of fair process rights, such as the right to a reasoned decision and 
access to judicial review, including the possibility to challenge enforcement and sanctioning 
measures. These rights apply in the event of administrative proceedings. 

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4. 

BUDGETARY IMPLICATIONS 

In order most effectively to achieve the objectives of this initiative, it is necessary to finance a 
number  of  actions  at  Commission  level,  involving  the  redeployment  or  creation  of  posts 
amounting  to  around  145  full-time  equivalents38.  The  human  resources  expenditure  in 
2021-2027  will  amount  to  approx.  EUR 80.490 million.  Other  administrative  expenses  are 
projected to reach EUR 0. 800 million over that period. Operational expenditure, which will 
be  used  to  finance  the  necessary  IT  infrastructure,  studies  and  consultations  to  ensure 
effective  enforcement  of 
instrument  will  reach  approx.  EUR 7.825 million.  IT 
development  and  procurement  choices  will  be  subject  to  pre-approval  by  the  European 
Commission  Information  Technology  and  Cybersecurity  Board.  Other  appropriations  of  an 
administrative  nature  financed  from  the  envelope  for  specific  programmes  is  budgeted  at 
approx. EUR 1.225 million. 

the 

The total administrative expenditure for the implementation of the proposal in 2021-2027 will 
thus  amount  to  EUR 90.340 million,  part  of  which  will  be  financed  from  the  single  market 
programme.  The  financing  will  support  investigative  and  enforcement  actions,  monitoring 
activities  and  market  investigations.  It  will  also  support  a  regular  review  of  specific 
provisions,  an  evaluation  of  the  regulation  and  ongoing  evaluation  of  the  effectiveness  and 
efficiency of the measures taken. A detailed overview of the costs involved is provided in the 
financial statement linked to this initiative. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

Monitoring and evaluation constitute an important part of the proposal. The monitoring  will 
be  continuous  and  based  on  operational  objectives  and  specific  indicators.  Regular  and 
continuous monitoring will cover the following main aspects:  

i) the number of distortive foreign subsidies (based on cases); and  

ii) the effectiveness of the redressive measures imposed.  

In  addition,  the  Commission  may  monitor  developments  relating  to  distortive  foreign 
subsidies in the context of a market investigation. 

The  effectiveness  and  efficiency  of  the  proposal  will  be  monitored  using  pre-defined 
indicators to establish whether additional rules may be required (e.g. as regards enforcement) 
to ensure that foreign subsidies no longer distort the internal market. Consequently, the impact 
of the intervention will be assessed in the context of an evaluation exercise and, if required, a 
review clause will be activated under which the Commission may take appropriate measures, 
including legislative proposals. 

• 

Detailed explanation of the specific provisions of the proposal 

Chapter 1 sets out general provisions, including the subject matter and scope of the regulation 
(Article 1).  It  establishes  when a foreign subsidy is  deemed to  exist (Article  2), under what 
conditions it is considered to distort the internal market (Article 3) and what types of subsidy 
are  most  likely  to  have  a  distortive  effect  (Article  4).  It  describes  the  balancing  that  the 
Commission performs (Article 5) before imposing any redressive measures, and the possible 
types of redressive measure and commitment (Article 6).  

38  See also impact assessment (Annex III, point 2). 

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Chapter 2 governs the ex officio review of subsidies. More specifically, it establishes that the 
Commission  may,  on  its  own  initiative,  examine  information  from  any  source  regarding 
alleged distortive foreign subsidies (Article 7) under a preliminary review (Article 8) or in the 
context of an in-depth investigation (Article 9). It then establishes rules in relation to various 
tools  that  can  be  used  in  the  context  of  procedures  under  the  regulation,  which  include 
Commission  interim  measures  (Article  10)  and  requests  for  information  (Article  11).  In 
addition, the Commission will be able to conduct on-site inspections within the Union (Article 
12) and elsewhere (Article 13). In the event of non-cooperation by the undertaking concerned, 
the  Commission  can  take  a  decision  on  the  basis  of  the  facts  available  (Article  14).  It  can 
impose fines and periodic penalty payments (Article 15) for procedural infringements, such as 
the  supply  of  incorrect,  incomplete  or  misleading  information  in  the  context  of  an 
investigation,  and  for  non-compliance  with  Commission  decisions  imposing  redressive  or 
interim  measures,  or  commitments.  It  may  also  revoke  a  previous  decision  and  take  a  new 
decision (Article 16) where the undertaking concerned acts contrary to its commitments or it 
appears  that  the  previous  decision  was  based  on  incomplete,  incorrect  or  misleading 
information. 

Chapter 3 contains specific rules for concentrations. In particular, it lays down the conditions 
under which a foreign subsidy in a concentration is considered to distort the internal market 
(Article 17), defines what a concentration is (Article 18) and prescribes when notification of a 
concentration  should  be  given  (Article  19).  It  provides  more  detail  on  the  notification 
obligation  by  defining  the  concept  of  control  (Article  20)  and  explaining  how  to  calculate 
turnover  (Article  21)  and  the  level  of  financial  contribution  (Article  22).  It  sets  out  when  a 
concentration should be suspended and the corresponding time limits (Article 23). It specifies 
which procedural rules from Chapter 2 apply to notified concentrations during the preliminary 
review and in-depth investigation, adapted to the specificities of a notification system (Article 
24). The fines and periodic penalty payments (Article 25) set out in Chapter 2 also apply to 
notified concentrations, complemented by the possibility of imposing them in the event of a 
notification  providing  incorrect  or  misleading  information,  or  of  failure  to  notify  or  non-
compliance with the suspension obligation or  a decision prohibiting a concentration. 

Chapter 4 contains specific provisions on public procurement procedures. In particular, it lays 
down the conditions under which a foreign subsidy is considered to distort the internal market 
in  a  public  procurement  procedure  (Article  26),  sets  the  notification  thresholds  (Article  27) 
and  prescribes  when  a  notification  in  the  context  of  such  a  procedure  is  mandatory  (Article 
28).  It  specifies  which  procedural  rules  from  Chapter  2  apply  to  notified  financial 
contributions  in  public procurement  procedures and the time limits  for initiating and ending 
an in-depth investigation (Article 29). It describes the types of decision that the Commission 
can  adopt  (Article  30)  and  when  the  award  of  a  public  contract  to  potentially  subsidised 
bidders  in  public  procurement  procedures  should  be  suspended  (Article  31).  Finally,  it 
provides  that  fines  and  periodic  penalty  payments  can  be  imposed  as  set  out  in  Chapter  2, 
complemented by the possibility to do so in the event of a notification providing incorrect or 
misleading information, or of failure to notify (Article 32). 

Chapter 5 contains common procedural provisions. It describes the relation between ex officio 
review, notification of a concentration and notification of public procurement (Article 33). It 
provides  for  the  possibility  of  opening  a  market  investigation  (Article  34)  and  prescribes 
limitation  periods  (Article  35).  It  also  contains  an  obligation  to  publish  decisions  adopted 
under the regulation (Article 36) and specifies to whom such decisions should be addressed 
(Article  37).  Several  provisions  set  the  procedural  guarantees  before  the  Commission,  in 

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particular the rights of defence (Article 38) and the protection of professional secrecy (Article 
39).  

Chapter  6  describes  the  relationship  between  the  regulation  and  other  legal  instruments 
(Article 40). 

Chapter 7 contains further general provisions, such as the committee procedure for decisions 
(Article 41), as well as the possibility of adopting implementing provisions (Articles 42, 43) 
and delegated acts (Article 44), in accordance with specific rules on the delegation of powers 
(Article  45).  In  addition,  there  is  a  provision  for  a  review  of  the  regulation  (Article  46). 
Finally, the regulation contains certain transitional provisions (Article 47) and states when it 
will enter into force and when it will be applied (Article 48). 

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2021/0114 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on foreign subsidies distorting the internal market 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 114 and 207 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Economic and Social Committee1, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

A  strong,  open  and  competitive  internal  market  enables  both  European  and  foreign 
undertakings  to  compete  on  merits.  The  Union  benefits  from  a  sophisticated  and 
effective  system  of  State  aid  control,  aiming  at  ensuring  fair  conditions  for  all 
undertakings  engaging  in  an  economic  activity  in  the  internal  market.  This  State  aid 
control  system  prevents  Member  States  from  granting  State  aid  that  unduly  distorts 
competition in the internal market. 

At  the  same  time,  undertakings  might  receive  subsidies  from  third  countries,  that 
provide public funds which are then used, for instance, to finance economic activities 
in  the  internal  market  in  any  sector  of  the  economy,  such  as  participation  in  public 
procurement  tenders,  or  acquisitions  of  undertakings,  including  those  with  strategic 
assets  such  as  critical  infrastructure  and  innovative  technologies.  Such  subsidies  are 
currently not subject to Union State aid rules.  

Foreign subsidies can distort the internal market and undermine the level playing field 
for  various  economic  activities  in  the  Union.  This  could  in  particular  occur  in  the 
context  of  concentrations  entailing  a  change  of  control  over  Union  undertakings, 
where such concentrations are fully or partially financed through foreign subsidies, or 
if undertakings benefiting from  foreign subsidies are awarded public contracts  in  the 
Union. 

No existing Union instruments address distortions caused by foreign subsidies. Trade 
defence  instruments  enable  the  Commission  to  act  when  subsidised  goods  are 
imported into  the Union, but  not  when foreign subsidies take the form of subsidised 
investments,  or  when  services  and  financial  flows  are  concerned.  Under  the  WTO 
Agreement on Subsidies and Countervailing Measures, the Union has the possibility to 
initiate  State-to-State  dispute  settlement  against  certain  foreign  subsidies  granted  by 
WTO members and limited to goods. 

1 

OJ C […], […], p. […]. 

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(5) 

(6) 

(7) 

(8) 

(9) 

It is therefore necessary to complement existing Union instruments with a new tool to 
effectively deal with distortions in the internal market caused by foreign subsidies and 
ensure a level playing field.  In particular, the new tool complements Union State aid 
rules  which  deal  with  distortions  in  the  internal  market  caused  by  Member  State 
subsidies. 

Rules  and  procedures  to  investigate  foreign  subsidies  that  actually  or  potentially 
distort the internal market should be laid down and, where relevant, those distortions 
should  be  redressed.  Foreign  subsidies  could  distort  the  internal  market  if  the 
undertaking  benefitting  from  the  foreign  subsidy  engages  in  an  economic  activity  in 
the  Union.  This  Regulation  should  therefore  establish  rules  for  all  undertakings 
engaging in an economic activity in the Union. Given the significance of the economic 
activities pursued by SMEs, and their contribution to the fulfilment of the Union’s key 
policy goals, special attention is given to the impact of this Regulation on them.  

To ensure a level playing field throughout the internal market and consistency in the 
application of this Regulation, the Commission should be the sole authority competent 
to  apply  this  Regulation.  The  Commission  should  have  the  power  to  examine  any 
foreign subsidy to the extent it is in the scope of this Regulation in any sector of the 
economy  on  its  own  initiative  relying  on  information  from  all  available  sources.  To 
ensure  effective  control,  in  the  specific  case  of  large  concentrations  (mergers  and 
acquisitions)  and  public  procurement  procedures  above  certain  thresholds,  the 
Commission  should  have  the  power  to  review  foreign  subsidies  based  on  a  prior 
notification by the undertaking to the Commission.  

Foreign  subsidy  in  the  context  of  this  Regulation  should  be  understood  as  an 
intervention that meets three cumulative conditions.  

There should be a financial contribution provided, directly or indirectly, by the public 
authorities  of  a  third  country.  The  financial  contribution  may  be  granted  through 
public  or  private  entities.  Whether  a  public  entity  provides  a  financial  contribution 
should be determined on a case-by-case basis with due regard to elements such as the 
characteristics  of  the  relevant  entity  and  the  legal  and  economic  environment 
prevailing in the country in which the entity operates including the government’s role 
in the economy. Financial contributions may also be granted through a private entity if 
its actions can be attributed to the third country. 

(10)  Such a financial contribution should confer a benefit to an undertaking engaging in an 
economic  activity  in  the  internal  market.  A  financial  contribution  that  benefits  an 
entity engaging in non-economic activities does not constitute a foreign subsidy. The 
existence of a benefit should be determined on the basis of comparative benchmarks, 
such as the investment practice of private investors, rates for financing obtainable on 
the market, a comparable tax treatment, or the adequate remuneration for a given good 
or service..  If no directly comparable benchmarks are available, existing benchmarks 
could be adjusted or alternative benchmarks  could be established based on generally 
accepted assessment methods. 

(11)  The  benefit  should  be  conferred  to  an  individual  undertaking  or  industry  or  several 
undertakings or industries. The benefit could be established by law or in fact.  

(12)  Once the existence of a foreign subsidy is established, the Commission should assess 
whether the foreign subsidy distorts the internal market. Unlike State aid granted by a 
Member State, foreign subsidies are not generally prohibited. Subsidies in the form of 
export  financing  may  be  a  cause  of  particular  concern  because  of  their  distortive 

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effects.  This  is  not  the  case  if  such  financing  is  provided  in  line  with  the  OECD 
Arrangement on officially supported export credits. The Commission should assess on 
a case-by-case basis whether a foreign subsidy distorts the internal market.  

(13)  The lack of transparency concerning many foreign subsidies and the complexity of the 
commercial  reality  may  make  it  difficult  to  unequivocally  identify  or  quantify  the 
impact of a given foreign subsidy on the internal market. To determine the distortion, 
it  therefore  appears  necessary  to  use  a  non-exhaustive  set  of  indicators.  When 
assessing the extent to which a foreign subsidy  can improve the competitive position 
of  the  undertaking  concerned  and,  in  doing  so,  actually  or  potentially  negatively 
affects  competition  in  the  internal  market,  the  Commission  could  have  regard  to 
certain indicators, including but not limited to the amount and nature of the subsidy, 
the  purpose  and  conditions  attached  to  the  foreign  subsidy  as  well  as  its  use  in  the 
internal market. 

(14)  When  applying  these  indicators,  the  Commission  could  take  into  account  different 
elements such as the size of the subsidy in absolute terms or in relation to the size of 
the  market  or  to  the  value  of  the  investment.  For  instance,  a  concentration,  in  the 
context  of which  a foreign subsidy  covers a substantial  part of the purchase price of 
the target, is likely to be distortive. Similarly, foreign subsidies covering a substantial 
part  of  the  estimated  value  of  a  contract  to  be  awarded  in  a  public  procurement 
procedure are likely to cause distortions. If a foreign subsidy is granted for operating 
costs,  it  seems  more  likely  to  cause  distortions  than  if  it  is  granted  for  investment 
costs.  Foreign  subsidies  to  small  and  medium-sized  undertakings  may  be  considered 
less  likely  to  cause  distortions  than  foreign  subsidies  to  large  undertakings. 
Furthermore,  the  characteristics  of  the  market,  and  in  particular  the  competitive 
conditions  on  the  market,  such  as  barriers  to  entry,  should  be  taken  into  account. 
Foreign  subsidies  leading  to  overcapacity  by  sustaining  uneconomic  assets  or  by 
encouraging  investment  in  capacity  expansions  that  would  otherwise  not  have  been 
built  are  likely  to  cause  distortions.  A  foreign  subsidy  to  a  beneficiary  that  shows  a 
low  degree  of  activity  in  the  internal  market,  measured  for  instance  in  terms  of 
turnover  achieved  in  the  Union,  is  less  likely  to  cause  distortions  than  a  foreign 
subsidy  to  a  beneficiary  that  has  a  more  significant  level  of  activity  in  the  internal 
market. Finally, foreign subsidies not exceeding EUR 5 million should be deemed, as 
a  general  rule,  unlikely  to  distort  the  internal  market  within  the  meaning  of  this 
Regulation. 

(15)  Like  certain  types  of  State  aid,  also  certain  categories  of  foreign  subsidies,  such  as 
unlimited guarantees, are likely to create distortions in the internal market because of 
their  nature.  Those  categories  should  not  require  a  detailed  assessment  based  on 
indicators.  An  undertaking  could  in  any  event  show  that  the  foreign  subsidy  in 
question would not distort the internal market in the specific circumstances of the case. 

(16)  The Commission  should  take into account  the positive effects  of the  foreign subsidy 
on  the  development  of  the  relevant  subsidised  economic  activity.  The  Commission 
should weigh these positive effects against the negative effects of a foreign subsidy in 
terms  of  distortion  on  the  internal  market  in  order  to  determine,  if  applicable,  the 
appropriate redressive measure or accept commitments. The balancing may  also lead 
to  the  conclusion  that  no  redressive  measures  should  be  imposed.  Categories  of 
foreign  subsidies  that  are  deemed  most  likely  to  distort  the  internal  market  are  less 
likely to have more positive than negative effects. 

EN 

17 

  EN 

 
(17)  Where  the  Commission  examines  a  foreign  subsidy  on  its  own  initiative,  it  should 
have  the  power  to  impose  redressive  measures  on  an  undertaking  to  remedy  any 
distortion  caused  by  a  foreign  subsidy  in  the  internal  market.  Redressive  measures 
should  be  proportionate  and  suitable  to  remedy  the  distortion  at  stake.  They  should 
include behavioural or structural remedies or the repayment of the foreign subsidy.  

(18)  The undertaking concerned should have the possibility to offer commitments in order 
to  remedy the distortion caused by the foreign subsidy.  If the Commission considers 
that  the  commitments  offered  fully  and  effectively  remedy  the  distortion,  it  could 
accept them and make them binding by decision.  

(19)  The undertaking concerned could offer to repay the subsidy, together with appropriate 
interest. The Commission should accept a repayment offered as a commitment if it can 
ascertain that the repayment fully remedies the distortion, is executed in a transparent 
manner and is effective in practice, while taking into account the risk of circumvention 
of the objectives of this Regulation.  

(20)  Unless the undertakings concerned offer commitments that would fully and effectively 
remedy the identified distortion, the Commission should have the power to prohibit a 
concentration  or  the  award  of  a  public  contract  before  it  takes  place.  Where  the 
concentration  has  already  been  implemented,  notably  in  cases  where  no  prior 
notification  was  required  because  the  notification  thresholds  were  not  reached,  the 
distortion may nonetheless be so substantial that it cannot be remedied by behavioural 
or  structural  measures  or  by  the  repayment  of  the  subsidy.  In  such  cases,  the 
Commission  could  decide  to  remedy  the  distortion  by  ordering  the  undertakings 
concerned to dissolve the concentration.  

(21)  The  Commission  should  have  the  power,  on  its  own  initiative,  to  examine  any 
information on foreign subsidies. To this end, it is necessary to establish a procedure 
consisting of two steps, namely a preliminary review and an in-depth investigation.  

(22)  The  Commission  should  be  given  adequate  investigative  powers  to  gather  all 
necessary information. It should therefore have the power to request information from 
any  undertaking  or  association  of  undertakings  throughout  the  whole  procedure.  In 
addition, the Commission should have the power to impose fines and periodic penalty 
payments  for  failure  to  timely  supply  the  requested  information  or  for  supplying 
incomplete, incorrect or misleading information. The Commission could also address 
questions to Member States or to third countries. Furthermore, the Commission should 
have the power to make fact-finding visits at the Union premises of the undertaking, 
or,  subject  to  agreement  by  the  undertaking  and  the  third  country  concerned,  at  the 
premises of the undertaking in the third country. The Commission should also have the 
power to  take decisions  on the basis of facts  available if the undertaking  in  question 
does not cooperate.  

(23)  Furthermore,  where  necessary  to  restore  competition  in  the  internal  market 
immediately and to prevent irreparable harm, the Commission should have the power 
to adopt interim measures.  

(24) 

In all cases where, as a result of the preliminary review, the Commission has sufficient 
indications  of  the  existence  of  a  foreign  subsidy  distorting  the  internal  market,  the 
Commission  should  have  the  power  to  launch  an  in-depth  investigation  to  gather 
additional  relevant  information  to  assess  the  foreign  subsidy,  and  to  allow  the 
interested parties to exercise their rights of defence. 

(25)  The Commission should close the in-depth investigation by adopting a decision. 

EN 

18 

  EN 

 
(26)  The  Commission  should  have  appropriate  instruments  to  ensure  the  effectiveness  of 
commitments and redressive measures. If the undertaking concerned does not comply 
with  a  decision  with  commitments,  a  decision  imposing  redressive  measures,  or  a 
decision ordering interim measures, the Commission should have the power to impose 
fines and periodic penalty payments. 

(27) 

In  order  to  ensure  the  correct  and  effective  application  of  this  Regulation,  the 
Commission should have the power to revoke a decision and adopt a new one, where 
the decision was based on incomplete, incorrect or misleading information, or  where 
an undertaking acts contrary to its commitments or the redressive measures imposed. 

(28)  Given the potentially significant impact of concentrations on the internal  market, the 
Commission  should  have  the  power,  upon  notification,  to  examine  information  on 
the  context  of  a  proposed  concentration. 
foreign  financial  contributions 
Undertakings  should  not  be  allowed  to  implement  the  concentration  prior  to  the 
conclusion of the Commission’s review. 

in 

(29)  This  examination  by  the  Commission  should  follow  the  same  procedure  as  the  one 
where  a  foreign  subsidy  is  reviewed  on  the  Commission’s  initiative,  subject  to 
adjustments to reflect the specificities of concentrations. 

(30) 

It is necessary to strike a balance between effective protection of the internal market 
and  the  need  to  limit  the  administrative  burden  on  undertakings  subject  to  this 
Regulation. Therefore, only concentrations meeting combined thresholds as defined in 
this  Regulation  based  on  the  size  of  the  turnover  in  the  Union  and  the  size  of  the 
subsidy should be subject to mandatory prior notification. 

(31)  Below  the  notification  thresholds,  the  Commission  could  require  the  notification  of 
potentially subsidised concentrations that were not yet implemented or the notification 
of potentially subsidised bids prior to the award of a public contract, if it considers that 
the  concentration  or  the  bid  would  merit  ex-ante  review  given  their  impact  in  the 
Union. The Commission should also have the possibility to carry out a review on its 
own initiative of already implemented concentrations or awarded public contracts. 

(32)  When reviewing a concentration, the assessment of whether there is a distortion in the 
internal  market  should  be  limited  to  the  concentration  at  stake,  and  only  foreign 
subsidies granted in the three years prior to the concentration should be considered in 
the assessment. 

(33)  The  need  to  address  distortive  foreign  subsidies  is  especially  salient  in  public 
procurement, given its economic significance in the internal market and the fact that it 
is  financed  by  taxpayer  funds.  The  Commission  should  have  the  power,  upon 
notification  prior  to  the  award  of  a  public  contract  or  concession,  to  examine 
information on foreign financial contributions to the participating undertakings in the 
context  of  a  public  procurement  procedure.  Prior  notifications  should  be  mandatory 
above  a  threshold  set  in  this  Regulation  to  capture  economically  significant  cases 
while  minimising  the  administrative  burden  and  not  hindering  the  participation  of 
SMEs  in  public  procurement.  That  obligation  of  prior  notification  above  a  threshold 
should  also  apply  to  groups  of  economic  operators  referred  to  in  Article  26(2)  of 
Directive 2014/23/EU of the European Parliament  and of the Council2, Article 19(2) 

2 

Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award 
of concession contracts (OJ L 94, 28.3.2014, p. 1). 

EN 

19 

  EN 

 
                                                 
 
of Directive 2014/24/EU of the European Parliament and of the Council3 and Article 
37(2)  of  Directive  2014/25/EU  of  the  European  Parliament  and  of  the  Council4.  It 
should also apply to the main subcontractors and the main suppliers of undertaking.  

(34)  When  a  foreign  financial  contribution  is  notified  in  the  context  of  a  public 

procurement procedure, the assessment should be limited to that procedure.  

(35) 

It  should  be  ensured  that  the  principles  governing  public  procurement,  notably 
proportionality,  non-discrimination,  equal  treatment,  and  transparency,  are  respected 
as  regards  all  undertakings  involved  in  the  public  procurement  procedure,  regardless 
of investigations initiated and pending pursuant to this Regulation. 

(36)  Foreign  subsidies  that  enable  an  undertaking  to  submit  a  tender  which  is  unduly 
advantageous  in  relation  to  the  works,  supplies  or  services  concerned  should  be 
deemed to actually or potentially create a distortion in a public procurement procedure. 
Those distortions should therefore be assessed on the basis of the non-exhaustive set 
of  indicators  described  in  recitals  13  and  14  as  well  as  the  notion  of  unduly 
advantageous  tender.  The  indicators  should  allow  to  determine  how  the  foreign 
subsidy distorts competition by improving the competitive position of an undertaking 
and enabling it to  submit  an unduly advantageous tender. The opportunity  should be 
given to undertakings to justify that the tender is not unduly advantageous, including 
by  adducing  the  elements  referred  to  in  Article  69(2)  of  Directive  2014/24/EU.  The 
prohibition  of  the  award  should  only  apply  where  the  advantageous  nature  of  the 
tender  benefiting  from  foreign  subsidies  cannot  be  justified,  the  tender  would  be 
awarded  the  contract  and  the  undertaking  submitting  the  tender  did  not  offer 
commitments considered appropriate and sufficient to fully and effectively remove the 
distortion.  

(37)  Taking into account the nature of the ex ante review mechanism for concentrations and 
public  procurement  awards,  and  the  need  for  legal  certainty  regarding  these  specific 
transactions, a concentration or public procurement tender notified and assessed under 
the  respective  procedures  cannot  be  reviewed  again  by  the  Commission  on  its  own 
initiative. Financial contributions of which the Commission was informed through the 
notification  procedure  may  however  also  be  relevant  outside  the  concentration  or 
procurement  procedure.  In  order  to  gather  information  on  foreign  subsidies,  the 
Commission  should  have  the  possibility  to  launch  investigations  regarding  specific 
sectors of the economy, particular types of economic activity or the use of particular 
foreign subsidy instruments. 

(38)  For  the  same  reasons,  it  is  appropriate  to  provide  for  limitation  periods  for  the 

imposition and enforcement of fines and periodic penalty payments. 

(39) 

In the interest of transparency and legal certainty, it is appropriate to publish either in 
full or in a summary form all decisions adopted by the Commission. 

3 

4 

EN 

Directive  2014/24/EU of  the  European  Parliament  and  of  the  Council  of  26  February  2014 on  public 
procurement and repealing Directive 2004/18/EC (OJ L 94, 28.3.2014, p. 65). 

Directive  2014/25/EU  of  the  European  Parliament  and  of  the  Council  of  26  February  2014  on 
procurement  by  entities  operating  in  the  water,  energy,  transport  and  postal  services  sectors  and 
repealing Directive 2004/17/EC (OJ L 94, 28.3.2014, p. 243). 

20 

  EN 

 
                                                 
 
(40)  The  Commission,  when  publishing  its  decisions,  should  respect  the  rules  on 
professional secrecy, including the protection of all confidential information, business 
secrets and personal data, in accordance with Article 339 of the Treaty. 

(41) 

In  cases  where  information  marked  by  the  undertaking  as  confidential  or  business 
secret  does  not  seem  to  be  covered  by  obligations  of  professional  secrecy,  it  is 
appropriate  to  have  a  mechanism  in  place  according  to  which  the  Commission  can 
decide  the  extent  to  which  such  information  can  be  disclosed.  Any  such  decision  to 
reject  a  claim  that  information  is  confidential  should  indicate  a  period  at  the  end  of 
which the information  will  be disclosed, so that the respondent can make use of any 
judicial protection available to it, including any interim measure. 

(42)  The undertakings or associations of undertakings concerned by an investigation under 
this  Regulation  should  have  the  opportunity  of  submitting  their  observations.  While 
ensuring  preservation  of  the  rights  of  defence  of  the  undertakings  concerned,  it  is 
essential that business secrets be protected. 

(43)  The implementation of this Regulation by the Union should comply with  Union law, 
the WTO Agreement and be consistent with commitments made under other trade and 
investment agreements to which the Union or the Member States are parties. 

(44)  Restrictions to Articles 34, 49, 56 and 63 of the Treaty can be justified by the need to 
avoid  unfair  competition,  provided  that  such  restrictions,  like  other  restrictions  of 
fundamental  freedoms  comply  with  the  general  principles  of  Union  law,  such  as 
proportionality, legal certainty, and with fundamental rights.  

(45)  The implementation of this Regulation may overlap with sectoral rules, in particular in 
the  area  of  maritime  and  air  transport.  Therefore,  it  is  necessary  to  clarify  the 
relationship  between  this  Regulation  and  sectoral  instruments  dealing  with  foreign 
subsidies, namely Regulation (EU) 2016/1035 of the European Parliament and of the 
Council5; Council Regulation (EEC) 4057/866; and Regulation (EU) 2019/712 of the 
European Parliament and of the Council7.  

(46)  Where  the  Commission  adopts  a  decision  at  the  end  of  an  in-depth  investigation, 
Member  States  should  be  adequately  involved  prior  to  the  decision  making  in  an 
advisory  procedure  pursuant  to  Article  4  of  Regulation    (EU)  No  182/2011  of  the 
European  Parliament  and  of  the  Council8.  The  choice  of  this  procedure  is  justified 
taking  into  account  the  role  of  Member  States  in  competition  and  State  aid 
instruments, which also aim at levelling the playing field in the internal market.  

5 

6 

7 

8 

Regulation  (EU)  2016/1035  of  the  European  Parliament  and  of  the  Council  of  8  June  2016  on 
protection against injurious pricing of vessels (OJ L 176, 30.6.2016, p. 1). 

Council  Regulation  (EEC)  No  4057/86  of  22  December  1986  on  unfair  pricing  practices  in  maritime 
transport (OJ L 378, 31.12.1986, p. 14). 

Regulation  (EU)  2019/712  of  the  European  Parliament  and  of  the  Council  of  17  April  2019  on 
safeguarding  competition  in  air  transport,  and  repealing  Regulation  (EC)  No  868/2004  (OJ  L  123, 
10.5.2019, p. 4). 

Regulation  (EU)  No  182/2011  of  the  European  Parliament  and  of  the  Council  of  16  February  2011 
laying down the rules and general principles concerning mechanisms for control by Member States of 
the Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13). 

EN 

21 

  EN 

 
                                                 
 
 
 
 
(47) 

(48) 

In  order  to  ensure  uniform  conditions  for  the  implementation  of  this  Regulation, 
implementing  powers  should  be  conferred  on  the  Commission  in  accordance  with 
Article 291 of the Treaty. Those powers should be exercised  to set out the form and 
content  of  notifications  of  concentrations  as  well  as  of  financial  contributions  in  the 
context  of  public  procurement  procedures,  details  of  disclosure,  form  and  content  of 
transparency  requirements,  calculation  of  time-limits,  conditions  and  time-limits  for 
commitments  and  detailed  rules  on  the  procedural  steps  concerning  investigations 
regarding  public  procurement  procedures.  Those  powers  should  be  exercised  in 
accordance with Regulation (EU) No 182/2011.   

In  order  to  ensure  a  level  playing  field  on  the  internal  market  also  in  the  long  term, 
with  a  view  to  ensuring  adequate  coverage  of  cases  investigated  both  through 
notifications as well as ex officio, the power to adopt acts in accordance with Article 
290 of the Treaty should be delegated to the Commission in respect of amending the 
notification  thresholds  for  concentrations  and  for  public  procurement  procedures, 
exempting  certain  categories  of  undertakings  from  the  notification  obligations  under 
this Regulation, as well as amending the time limits for the preliminary review and the 
in-depth investigations of notified concentrations or notified financial contributions in 
the context of a public procurement procedure. In relation to financial contributions in 
the context of a public procurement procedure, the power to adopt such acts should be 
exercised  in  a  way  that  takes  into  account  the  interests  of  SMEs.  It  is  of  particular 
importance  that  the  Commission  carries  out  appropriate  consultations  during  the 
preparations  of  those  acts,  including  at  expert  level,  and  that  those  consultations  be 
conducted  in  accordance  with  the  principles  laid  down  in  the  Interinstitutional 
Agreement  of  13  April  2016  on  Better  Law-Making9.  In  particular,  to  ensure  equal 
participation  in  the  preparation  of  delegated  acts,  the  European  Parliament  and  the 
Council should receive all documents at the same time as Member States' experts, and 
their  experts  systematically  should  have  access  to  meetings  of  Commission  expert 
groups dealing with the preparation of delegated acts.  

(49)  Where a concentration is notifiable pursuant to this Regulation, financial contributions 
to any of the parties to the concentration granted in the three years prior to the date of 
application  of  this  Regulation  should  fall  within  the  scope  of  this  Regulation.  In  the 
context  of  a  public  procurement  procedure,  this  Regulation  should  also  apply  to  a 
financial contribution granted to an undertaking in the three years prior to the date of 
application of this Regulation, 

HAVE ADOPTED THIS REGULATION: 

9 

Interinstitutional Agreement between the European Parliament, the Council of the European Union and 
the European Commission of 13 April 2016 on Better Law-Making (OJ L 123, 12.5.2016, p. 1). 

EN 

22 

  EN 

 
 
 
                                                 
CHAPTER 1: GENERAL PROVISIONS 

Article 1  

Subject matter and scope 

(1) 

(2) 

(1) 

This  Regulation  lays  down  rules  and  procedures  for  investigating  foreign  subsidies 
that  distort  the  internal  market  and  for  redressing  such  distortions.  Such distortions 
may arise with respect to any economic activity, and in particular in concentrations 
and public procurement procedures.  

This Regulation addresses foreign subsidies granted to an undertaking engaging in an 
economic  activity  in  the  internal  market.  An  undertaking  acquiring  control  or 
merging with an undertaking established in the Union or an undertaking participating 
in  a  public  procurement  procedure  is  considered  to  be  engaging  in  an  economic 
activity in the internal market.  

Article 2  

Existence of a foreign subsidy 

For the purpose of this Regulation, a foreign subsidy shall be deemed to exist where 
a  third  country  provides  a  financial  contribution  which  confers  a  benefit  to  an 
undertaking  engaging  in  an  economic  activity  in  the  internal  market    and  which  is 
limited,  in  law  or  in  fact,  to  an  individual  undertaking  or  industry  or  to  several 
undertakings or industries. 

(2) 

For the purpose of this Regulation,  

(a) 

a financial contribution shall include: 

(i)  the  transfer  of  funds  or  liabilities,  such  as  capital  injections,  grants,  loans, 
loan  guarantees,  fiscal  incentives,  setting  off  of  operating  losses, 
compensation  for  financial  burdens  imposed  by  public  authorities,  debt 
forgiveness, debt to equity swaps or rescheduling;  

(ii) the foregoing of revenue that is otherwise due; or 

(iii) the provision of goods or services or the purchase of goods and services;  

(b) 

the  financial  contribution  provided  by  the  third  country  shall  include  the 
financial contribution provided by: 

(i) the central government and government authorities at all other levels;  

(ii) foreign public entities, whose actions can be attributed to the third country, 
taking into account elements such as the characteristics of the entity, the 
legal  and  economic  environment  prevailing  in  the  State  in  which  the 
entity operates including the government’s role in the economy; or 

(iii)  any  private  entity  whose  actions  can  be  attributed  to  the  third  country, 

taking into account all relevant circumstances.   

EN 

23 

  EN 

 
Article 3  

Distortions on the internal market 

(1) 

A distortion on the internal market shall be deemed to exist where a foreign subsidy 
is  liable  to  improve  the  competitive  position  of  the  undertaking  concerned  in  the 
internal  market  and  where,  in  doing  so,  it  actually  or  potentially  negatively  affects 
competition  on  the  internal  market.  Whether  there  is  a  distortion  on  the  internal 
market  shall  be  determined  on  the  basis  of  indicators,  which  may  include  the 
following: 

(a) 

(b) 

(c) 

(d) 

(e) 

the amount of the subsidy;  

the nature of the subsidy; 

the situation of the undertaking and the markets concerned;  

the  level  of  economic  activity  of  the  undertaking  concerned  on  the  internal 
market;  

the purpose and conditions attached to the foreign subsidy as well as its use on 
the internal market.   

(2) 

A foreign subsidy is unlikely to distort the internal market if its total amount is below 
EUR 5 million over any consecutive period of three fiscal years.  

Article 4  

Categories of foreign subsidies most likely to distort the internal market 

A  foreign  subsidy  falling  in  any  of  the  following  categories  is  most  likely  to  distort  the 
internal market: 

(1) 

(2) 

(3) 

(4) 

(1) 

a foreign subsidy granted to an ailing undertaking, that is to say which will likely go 
out  of  business  in  the  short  or  medium  term  in  the  absence  of  any  subsidy,  unless 
there  is  a  restructuring  plan  that  is  capable  of  leading  to  the  long-term  viability  of 
that undertaking and includes a significant own contribution by the undertaking;  

a foreign subsidy in the form of an unlimited guarantee for debts or liabilities of the 
undertaking, that is to say without any limitation as to the amount  or the duration of 
such guarantee; 

a foreign subsidy directly facilitating a concentration;  

a foreign subsidy enabling an undertaking to submit an unduly advantageous tender, 
on the basis of which the undertaking would be awarded the public contract.  

Article 5  

Balancing 

The  Commission  shall,  where  warranted,  balance  the  negative  effects  of  a  foreign 
subsidy  in  terms  of  distortion  on  the  internal  market  with  positive  effects  on  the 
development of the relevant economic activity. 

EN 

24 

  EN 

 
(2) 

The  Commission  shall  take  into  account  the  balancing  between  the  negative  and 
positive  effects  when  deciding  whether  to  impose  redressive  measures  or  to  accept 
commitments, and the nature and level of those redressive measures or commitments. 

Article 6  

Commitments and redressive measures  

(1) 

(2) 

To remedy  the distortion on  the internal  market  actually or potentially  caused by  a 
foreign subsidy, the Commission may impose redressive measures. The undertaking 
concerned may also offer commitments.  

Commitments  or  redressive  measures  shall  fully  and  effectively  remedy  the 
distortion caused by the foreign subsidy in the internal market. 

(3) 

Commitments or redressive measures may consist of the following: 

(a)  offering  access  under 

to  an 
infrastructure that was acquired or supported by the distortive foreign subsidies 
unless  such  fair  and  non-discriminatory  access  is  already  provided  for  by 
legislation in force in the Union; 

fair  and  non-discriminatory  conditions 

(b) 

(c) 

(d) 

reducing capacity or market presence;   

refraining from certain investments;  

licensing on fair, reasonable and non-discriminatory terms of assets acquired or 
developed with the help of foreign subsidies; 

(e)  publication of results of research and development; 

(f) 

(g) 

(h) 

divestment of certain assets; 

requiring the undertakings concerned to dissolve the concentration; 

repayment of the foreign subsidy, including an appropriate interest rate. 

(4) 

(5) 

(6) 

The Commission may impose reporting and transparency requirements.  

If  an  undertaking  offers  commitments  which  fully  and  effectively  remedy  the 
distortion on the internal market, the Commission may accept them and make them 
binding on the undertaking in a decision with commitments according to Article 9(3). 

Where the undertaking concerned proposes to repay the foreign subsidy including an 
appropriate 
the  Commission  shall  accept  such  repayment  as 
commitment if it can ascertain that the repayment is transparent and effective, while 
taking into account the risk of circumvention. 

interest  rate, 

CHAPTER 2: EX OFFICIO REVIEW OF FOREIGN SUBSIDIES 

Article 7  

Ex officio review of foreign subsidies 

The  Commission  may  on  its  own  initiative  examine  information  from  any  source  regarding 
alleged distortive foreign subsidies.  

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Article 8  

Preliminary review 

(1) 

The Commission shall seek all the information it considers necessary to assess, on a 
preliminary basis, whether the financial contribution under examination constitutes a 
foreign  subsidy  and  whether  it  distorts  the  internal  market.  To  that  end,  the 
Commission may in particular: 

(a) 

(b) 

request information in accordance with Article 11;  

conduct inspections in and outside the Union in accordance with Article 12 or 
Article 13. 

(2) 

Where  the  Commission,  based  on  the  preliminary  review,  considers  that  there  are 
sufficient  indications  that  an  undertaking  has  been  granted  a  foreign  subsidy  that 
distorts the internal market, it shall 

(a) 

adopt a decision to initiate an in-depth investigation (‘decision to initiate the in-
depth investigation’), which shall summarise the relevant issues of fact and law 
and  shall  include  the  preliminary  assessment  of  the  existence  of  a  foreign 
subsidy and of the actual or potential distortion on the internal market; 

(b) 

inform the undertaking concerned; and  

(c)  publish  a  notice  in  the Official  Journal  of  the  European  Union,  which  invites 
interested  parties,  Member  States  and  the  third  country  concerned  to  express 
their views in writing within a prescribed period of time. 

Where the Commission, after a preliminary assessment, concludes that there are no 
sufficient  grounds  to  initiate  the  in-depth  investigation,  either  because  there  is  no 
foreign subsidy or because there are no indications of an actual or potential distortion 
on  the  internal  market,  it  shall  close  the  preliminary  review  and  inform  the 
undertaking concerned. 

Article 9  

In-depth investigation 

During  the  in-depth  investigation,  the  Commission  shall  further  assess  the  foreign 
subsidy  distorting  the  internal  market  that  has  been  identified  in  the  decision  to 
initiate the in-depth investigation, seeking all the information it considers necessary 
in accordance with Articles 11, 12 and 13. 

Where  the  Commission  finds  that  a  foreign  subsidy  distorts  the  internal  market 
pursuant  to  Articles  3  to  5,  it  may  impose  redressive  measures  (‘decision  with 
redressive measures’).  

Where  the  Commission  finds  that  a  foreign  subsidy  distorts  the  internal  market 
pursuant to Articles 3 to 5 and the undertaking concerned offers commitments, which 
the Commission deems appropriate and sufficient to fully and effectively remedy the 
distortion, it may by a decision make these commitments binding on the undertaking 
(‘decision  with  commitments’).  A  decision  accepting  the  repayment  of  a  foreign 
subsidy  in  accordance  with  Article  6(6)  shall  be  considered  a  decision  with 
commitments. 

(3) 

(1) 

(2) 

(3) 

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(4) 

The Commission shall adopt a no objection decision where it finds that:  

(a) 

(b) 

the  preliminary  assessment  as  set  out  in  its  decision  to  initiate  the  in-depth 
investigation is not confirmed; or  

a distortion on the internal market is outweighed by positive effects within the 
meaning of Article 5.  

Article 10  

Interim measures 

The Commission may take interim measures, where: 

(1) 

(2) 

(1) 

(2) 

there  are  indications  that  a  financial  contribution  constitutes  a  foreign  subsidy  and 
distorts the internal market; and 

there  is  a  serious  risk  of  substantial  and  irreparable  damage  to  competition  on  the 
internal market. 

Article 11  

Information requests 

The  Commission  may  require  an  undertaking  concerned  to  provide  all  necessary 
information.  

The  Commission  may  also  request  such  information  from  other  undertakings  or 
associations of undertakings.  

(3) 

A request for information to an undertaking or an association of undertakings shall:  

(a) 

(b) 

(c) 

state its legal basis and its purpose, specify what information is required and set 
an appropriate time limit within which the information is to be provided;  

contain a statement that if the information supplied is incorrect, incomplete or 
misleading  fines  and  periodic  penalty  payments  provided  for  in  Article  15 
could be imposed;  

contain a statement that, pursuant to Article 14, a lack of cooperation from the 
undertaking concerned allows the Commission to take a decision on the basis 
of the facts that are available. 

At the request of the Commission, Member States shall provide it with all necessary 
information to carry out the duties assigned to it by this Regulation. 

The Commission may also request a third country concerned to provide all necessary 
information.  

Article 12  

Inspections within the Union 

The Commission may conduct the necessary inspections of undertakings. 

Where the Commission undertakes such an inspection, the officials authorised by the 
Commission to conduct an inspection shall be empowered: 

(4) 

(5) 

(1) 

(2) 

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(a) 

(b) 

(c) 

to enter any premises and land of the undertaking concerned; 

to examine books and other business records and take, or request copies;  

to  ask  any  representative  or  member  of  staff  of  the  undertaking  for 
explanations on facts or documents relating to the subject-matter and purpose 
of the inspection and to record the answers;  

(d) 

to  seal  any  business  premises  and  books  or  records  for  the  period  and  to  the 
extent necessary for the inspection. 

(3) 

The  undertaking  concerned  shall  submit  to  inspections  ordered  by  decision  of  the 
Commission.  The  officials  and  other  accompanying  persons  authorised  by  the 
Commission to conduct an inspection shall exercise their powers upon production of 
a Commission decision:  

(a) 

(b) 

specifying the subject matter and purpose of the inspection; 

containing a statement that, pursuant to Article 14, a lack of cooperation from 
the  undertaking  concerned  allows  the  Commission  to  take  a  decision  on  the 
basis of the facts that are available;  

(c) 

referring to the possibility to impose fines and penalties provided for in Article 
15.  

In  good  time  before  the  inspection,  the  Commission  shall  give  notice  of  the 
inspection to the Member State in whose territory it is to be conducted. 

Officials  of  the  Commission  as  well  as  officials  authorised  or  appointed  by  the 
Member  State  in  whose  territory  the  inspection  is  to  be  conducted  shall,  at  the 
request of the Member State or of the Commission, actively assist the officials and 
other accompanying persons authorised by the Commission. To this end, they shall 
enjoy the powers specified in paragraph 2. 

Where officials  or  other  accompanying  persons authorised by the Commission  find 
that  an  undertaking  opposes  an  inspection  within  the  meaning  of  this  Article,  the 
Member State concerned shall provide them with the necessary assistance and shall 
request,  where  appropriate,  the  assistance  of  the  police  or  of  an  equivalent 
enforcement authority so as to enable them to conduct their inspection. 

Upon request of the Commission, a Member State shall in its own territory carry out 
any  inspection  or  other  fact-finding  measure  under  its  national  law  in  order  to 
establish whether there is a foreign subsidy distorting the internal market.  

(4) 

(5) 

(6) 

(7) 

Article 13  

Inspection outside the Union 

In order to carry out the duties assigned to it by this Regulation, the Commission may conduct 
inspections  in  the  territory  of  a  third  country,  provided  that  the  undertaking  concerned  has 
given its consent and the government of the third country has been officially notified and has 
agreed to the inspection. Article 12(1), (2), and (3) points (a) and (b) shall apply by analogy. 

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Article 14  

Non-cooperation 

(1) 

The Commission may take a decision pursuant to Article 8 or Article 9 on the basis 
of the facts available, if an undertaking concerned or a third country:  

(2) 

(3) 

(4) 

(1) 

(a)  provides  incomplete,  incorrect  or  misleading  information  in  response  to  an 

information request under Article 11;  

(b) 

(c) 

fails  to  provide  the  information  requested  within  the  time  limit  prescribed  by 
the Commission;  

refuses to submit to the Commission’s inspection within or outside the Union 
ordered under Article 12 or Article 13; or 

(d)  otherwise impedes the preliminary review or the in-depth investigation.  

Where  an  undertaking  or  association  of  undertakings,  a  Member  State  or  the  third 
country  has  supplied  incorrect  or  misleading  information  to  the  Commission,  that 
information shall be disregarded. 

Where an undertaking concerned, including a public undertaking which is directly or 
indirectly  controlled  by  the  State,  fails  to  provide  the  necessary  information  to 
determine  whether  a  financial  contribution  confers  a  benefit  to  it,  that  undertaking 
may be deemed to have received such benefit. 

When applying facts available, the result of the procedure may be less favourable to 
the undertaking concerned than if it had cooperated. 

Article 15  

Fines and periodic penalty payments  

The Commission may impose by decision fines and periodic penalty payments where 
an  undertaking  concerned  or  an  association  of  undertakings,  intentionally  or 
negligently:  

(a) 

supplies  incorrect,  incomplete  or  misleading  information  in  response  to  a 
request made pursuant to Article 11, or does not supply the information within 
the prescribed time limit;  

(b)  produces  the  required  books  or  other  records  related  to  the  business  in 

incomplete form during inspections under Article 12;  

(c) 

in response to a question asked in accordance with Article 12(2), point (c), 

(i) gives an incorrect or misleading answer, 

(ii)  fails  to  rectify  within  a  time-limit  set  by  the  Commission  an  incorrect, 

incomplete or misleading answer given by a member of staff, or 

(iii)  fails  or  refuses  to  provide  a  complete  answer  on  facts  relating  to  the 
subject-matter  and  purpose  of  an  inspection  ordered  by  a  decision 
adopted pursuant to Article 12(3);  

(d) 

refuses  to  submit  to  inspections  ordered  under  Article  12  or  has  broken  seals 
affixed in accordance with Article 12(2)(d). 

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(2) 

(3) 

(4) 

(5) 

Fines  imposed  in  the  cases  referred  to  in  paragraph  1  shall  not  exceed  1  %  of  the 
aggregate turnover of the undertaking or association of undertakings concerned in the 
preceding business year.  

Periodic penalty payments imposed in the cases referred to in paragraph 1 shall not 
exceed 5% of the average daily aggregate turnover of the undertaking or association 
of  undertakings  concerned  in  the  preceding  business  year  for  each  working  day  of 
delay, calculated from the date established in the decision, until it submits complete 
and correct information as requested by the Commission. 

Before adopting any decision in accordance with paragraph 1, the Commission shall 
set  a  final  time  limit  of  two  weeks  to  receive  the  missing  information  from  the 
undertaking or from the association of undertakings concerned. 

Where an undertaking concerned does not comply with a decision with commitments 
pursuant to Article 9(3), a decision ordering interim measures pursuant to Article 10 
or a decision imposing redressive measures pursuant to Article 9(2), the Commission 
may impose by decision: 

(a) 

fines  not  exceeding  10  %  of  the  aggregate  turnover  of  the  undertaking 
concerned in the preceding business year; and 

(b)  periodic  penalty  payments  not  exceeding  5%  of  the  average  daily  aggregate 
turnover of the undertaking concerned in the preceding business year for each 
day  of  non-compliance,  starting  from  the  day  of  the  Commission  decision 
imposing  such  penalty  payments,  until  the  Commission  finds  that  the 
undertaking concerned complies with the decision. 

(6) 

In fixing the amount of the fine or periodic penalty payment, regard shall be had to 
the  nature,  gravity  and  duration  of  the  infringement,  taking  due  account  of  the 
principles of proportionality and appropriateness. 

Article 16 

Revocation 

The Commission may revoke a decision taken pursuant to Article 9(2), (3) or (4) and adopt a 
new decision in any of the following cases: 

(1) 

where the undertaking concerned acts contrary to its commitments or the redressive 
measures imposed;  

(2) 

where the decision was based on incomplete, incorrect or misleading information.  

CHAPTER 3: CONCENTRATIONS 

Article 17  

Distortions on the internal market by foreign subsidies in concentrations 

In a concentration, the assessment whether there is a distortion on the internal market within 
the  meaning  of  Articles  3  or  4  shall  be  limited  to  the  concentration  at  stake.  Only  foreign 
subsidies  granted  in  the  three  calendar  years  prior  to  the  conclusion  of  the  agreement,  the 

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announcement of the public bid, or the acquisition of a controlling interest shall be considered 
in the assessment. 

Article 18  

Definition of and notification thresholds for concentrations 

(1) 

For the purposes of this Regulation, a concentration shall be deemed to arise where a 
change of control on a lasting basis results from any of the following: 

(2) 

(3) 

(a) 

(b) 

the  merger  of  two  or  more  previously  independent  undertakings  or  parts  of 
undertakings; 

the  acquisition,  by  one  or  more  persons  already  controlling  at  least  one 
undertaking, or by one or more undertakings, whether by purchase of securities 
or assets, by contract or by any other means, of direct or indirect control of the 
whole or parts of one or more other undertakings. 

The creation of a joint venture performing on a lasting basis all the functions of an 
autonomous  economic entity shall constitute a concentration within the meaning of 
paragraph 1. 

For the purposes of Article 19, a ‘notifiable concentration’ shall be deemed to arise 
where, in a concentration, 

(a) 

(b) 

the  acquired  undertaking  or  at  least  one  of  the  merging  undertakings  is 
established in the Union and generates an aggregate turnover in the Union of at 
least EUR 500 million; and 

the  undertakings  concerned  received  from  third  countries  an  aggregate 
financial contribution  in the three calendar  years  prior to  notification of more 
than EUR 50 million. 

(4) 

In  the  creation  of  a  joint  venture  referred  to  in  paragraph  2,  a  ‘notifiable 
concentration’ shall be deemed to arise where: 

(a) 

(b) 

the  joint  venture  itself  or  one  of  its  parent  undertakings  is  established  in  the 
Union  and  generates an  aggregate turnover in  the  Union of  at  least  EUR 500 
million; and 

the joint venture itself and its parent undertakings received from third countries 
an  aggregate  financial  contribution  in  the  three  calendar  years  prior  to 
notification of more than EUR 50 million. 

Article 19  

Prior notification of concentrations 

(1) 

(2) 

Notifiable  concentrations  shall  be  notified  to  the  Commission  prior  to  their 
implementation and following the conclusion of the agreement, the announcement of 
the public bid, or the acquisition of a controlling interest. 

The undertakings  concerned  may  also  notify the  proposed concentration  when they 
demonstrate to the Commission a good faith intention to conclude an agreement or, 
in  the  case  of  a  public  bid,  where  they  have  publicly  announced  their  intention  to 

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(3) 

(4) 

(5) 

make  such  a  bid,  provided  that  the  intended  agreement  or  bid  would  result  in  a 
notifiable concentration under paragraph 1. 

A  concentration  which  consists  in  a  merger  within  the  meaning  of  Article  18(1), 
point  (a)  or  in  the  acquisition  of  joint  control  within  the  meaning  of  Article  18(1), 
point (b) shall be notified jointly by the parties to the merger or by those acquiring 
joint control as the case may be. In all other cases, the notification shall be done by 
the  person  or  undertaking  acquiring  control  of  the  whole  or  parts  of  one  or  more 
undertakings. 

If the undertakings concerned fail to meet their obligation to notify, the Commission 
may  review  a  notifiable  concentration  in  accordance  with  this  Regulation  by 
requesting  the  notification  of  that  concentration.  In  that  case  the  Commission  shall 
not be bound by the time limits referred to in Article 23(1) and (4). 

The Commission may request the prior notification of any concentration which is not 
a  notifiable  concentration  within  the  meaning  of  Article  18  at  any  time  prior  to  its 
implementation  where  the  Commission  suspects  that  the  undertakings  concerned 
may  have  benefitted  from  foreign  subsidies  in  the  three  years  prior  to  the 
concentration.  That  concentration  shall  be  deemed  to  be  a  notifiable  concentration 
for the purposes of this Regulation. 

Article 20  

Definition of control 

(1) 

For the purposes of Article 18, control shall be constituted by rights, contracts or any 
other  means  which,  either  separately  or  in  combination  and  having  regard  to  the 
considerations  of  fact  or  law  involved,  confer  the  possibility  of  exercising  decisive 
influence on an undertaking, in particular by: 

(a)  ownership or the right to use all or part of the assets of an undertaking; 

(b) 

rights or contracts which confer decisive influence on the composition, voting 
or decisions of the organs of an undertaking. 

(2) 

Control shall be acquired by persons or undertakings which: 

(a) 

are holders of the rights or entitled to rights under the contracts concerned; or 

(b)  while not being holders of such rights or entitled to rights under such contracts, 

have the power to exercise the rights deriving therefrom. 

Article 21  

Calculation of turnover 

(1) 

Aggregate  turnover  shall  comprise  the  amounts  derived  by  the  undertakings 
concerned in the preceding financial year from the sale of products and the provision 
of services falling within the undertakings’ ordinary activities after deduction of sales 
rebates  and  of  value  added  tax  and  other  taxes  directly  related  to  turnover.  The 
aggregate turnover of an undertaking concerned shall not include the sale of products 
or  the  provision  of  services  between  any  of  the  undertakings  referred  to  in 
paragraph 4. 

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Turnover in the internal market shall comprise products sold and services provided to 
undertakings or consumers in the internal market. 

(2) 

By  way  of  derogation  from  paragraph  1,  where  the  concentration  consists  of  the 
acquisition  of  parts,  whether  or  not  constituted  as  legal  entities,  of  one  or  more 
undertakings,  only  the  turnover  relating  to  the  parts  which  are  the  object  of  the 
concentration shall be taken into account with regard to the seller or sellers. 

However,  two  or  more  transactions  within  the  meaning  of  the  first  subparagraph 
which take place within a two-year period between the same persons or undertakings 
shall  be  treated  as  one  and  the  same  concentration  arising  on  the  date  of  the  latest 
transaction. 

(3) 

Instead  of  turnover,  the  following  shall  be  used  for  the  following  categories  of 
undertakings: 

(a) 

for credit institutions and other financial institutions, the sum of the following 
income items as defined in Council Directive 86/635/EEC10, after deduction of 
value  added  tax  and  other  taxes  directly  related  to  those  items,  where 
appropriate: 

(i) interest income and similar income; 

(ii) income from securities: 

–  income from shares and other variable yield securities, 

–  income from participating interests, 

–  income from shares in affiliated undertakings; 

(iii) commissions receivable; 

(iv) net profit on financial operations; 

(v) other operating income; 

(b) 

for  insurance  undertakings,  the  value  of  gross  premiums  written  which  shall 
comprise all amounts received and receivable in respect of insurance contracts 
issued by or on behalf of the insurance undertakings,  including  also  outgoing 
reinsurance premiums, and after deduction of taxes and parafiscal contributions 
or  levies  charged  by  reference  to  the  amounts  of  individual  premiums  or  the 
total volume of premiums; 

For the purposes of point (a), for a credit or financial institution in the internal 
market the turnover shall comprise the income items, as defined in that point, 
which are received by the branch or division  of that  institution  established in 
the internal market. 

(4) 

Without  prejudice  to  paragraph  2,  the  aggregate  turnover  of  an  undertaking 
concerned shall be calculated by adding together the respective turnovers of: 

(a) 

(b) 

the undertaking concerned; 

those undertakings in which the undertaking concerned, directly or indirectly: 

(i) owns more than half the capital or business assets, 

10 

Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and consolidated accounts 
of banks and other financial institutions (OJ L 372, 31.12.1986, p. 1). 

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(ii) has the power to exercise more than half the voting rights, 

(iii)  has  the  power  to  appoint  more  than  half  the  members  of  the  supervisory 
board,  the  administrative  board  or  bodies  legally  representing  the 
undertakings, 

(iv) has the right to manage the undertakings' affairs; 

(c) 

(d) 

(e) 

those undertakings which have in the undertaking concerned any of the rights 
or powers referred to in point (b); 

those undertakings in which an undertaking as referred to in point (c) has any 
of the rights or powers referred to in point (b); 

those undertakings in which two or more undertakings as referred to in  points 
(a) to (d) jointly have any of the rights or powers referred to in point (b). 

(5) 

Where undertakings concerned jointly have the rights or powers listed in paragraph 
4, point (b), in calculating the aggregate turnover of the undertakings concerned, 

(a) 

account shall be taken of the turnover resulting from the sale of products and 
the  provision  of  services  between  the  joint  undertaking  and  any  third 
undertakings,  and  this  turnover  shall  be  apportioned  equally  amongst  the 
undertakings concerned; 

(b)  no account shall be taken of the turnover resulting from the sale of products or 
the  provision  of  services  between  the  joint  undertaking  and  each  of  the 
undertakings  concerned  or  any  other  undertaking  connected  with  any  one  of 
them, as set out in paragraph 4, points (b) to (e). 

Article 22 

Aggregation of financial contributions 

The  aggregate  financial  contribution  to  an  undertaking  concerned  shall  be  calculated  by 
adding  together  the  respective  financial  contributions  received  from  third  countries  by  all 
undertakings referred to in Article 21(4), points (a) to (e). 

Article 23  

Suspension of concentrations and time limits 

(1) 

A notifiable concentration shall not be implemented before its notification. 

In addition, the following time limits shall apply: 

(a)  where  the  Commission  receives  the  complete  notification,  the  concentration 
shall not be implemented for a period of 25 working days after that receipt; 

(b)  where  the  Commission  initiates  an  in-depth  investigation  no  later  than  25 
working days after receipt of the complete notification, the concentration shall 
not be implemented for a period of 90 working days after the opening of the in-
depth  investigation;  that  period  shall  be  extended  by  15  working  days  where 
the  undertakings  concerned  offer  commitments  pursuant  to  Article  6  with  a 
view to remedy the distortion on the internal market; 

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(c)  where  the  concentration  has  been  declared  not  to  distort  the  internal  market 
pursuant  to  a  decision  under  Article  24(3),  point  (a)  or  point  (b),  it  may  be 
implemented thereafter. 

Each  period  shall  begin  on  the  working  day  following  that  of  the  receipt  of  the 
complete  notification  or  of  the  adoption  of  the  relevant  Commission  decision, 
respectively. 

(2) 

Paragraph  1  shall  not  prevent  the  implementation  of  a  public  bid  or  of  a  series  of 
transactions in securities including those convertible into other securities admitted to 
trading  on  a  market  such  as  a  stock  exchange,  by  which  control  is  acquired  from 
various sellers, provided that: 

(3) 

(4) 

(5) 

(6) 

(a) 

(b) 

the concentration is notified to the Commission pursuant to Article 19 without 
delay; and 

the  acquirer  does  not  exercise  the  voting  rights  attached  to  the  securities  in 
question or does so only to maintain the full value of its investments based on a 
derogation granted by the Commission under paragraph 3. 

The  Commission  may,  upon  request,  grant  a  derogation  from  the  obligations  laid 
down in paragraphs 1 or 2. The request to grant a derogation shall state the grounds 
for  the  derogation.  In  deciding  on  the  request,  the  Commission  shall  take  into 
account  in  particular  the  effects  of  the  suspension  on  one  or  more  undertakings 
concerned by the concentration or on a third party and the risk of a distortion on the 
internal  market  posed  by  the  concentration.  Such  a  derogation  may  be  granted 
subject  to  certain  conditions  and  obligations  in  order  to  ensure  that  there  is  no 
distortion on the internal market. A derogation may be applied for and granted at any 
time, either before notification or after the transaction. 

The  time  limits  provided  for  in  paragraph  1,  point  (b)  shall  be  extended  if  the 
undertakings concerned make a request to that effect not later than 15 working days 
after  the  opening  of  the  in-depth  investigation  pursuant  to  Article  8.  The 
undertakings  concerned  may  make  only  one  such  request.  Likewise,  at  any  time 
following  the  opening  of  the  in-depth  investigation,  the  time  limits  provided  for  in 
paragraph 1, point (b) may be extended by the Commission with the agreement of the 
undertakings  concerned.  The total  duration of any  extension or extensions pursuant 
to this paragraph shall not exceed 20 working days. 

The time limits provided for in paragraph 1 may exceptionally be suspended where 
the undertakings have not supplied the complete information which the Commission 
has  requested  pursuant  to  Article  11  or  have  refused  to  submit  to  an  inspection 
ordered by decision pursuant to Article 12. 

The  Commission  may  adopt  a  decision  pursuant  to  Article  24(3)  without  being 
bound by the time limits referred to in paragraphs 1 and 4, in cases where: 

(a) 

it  finds  that  a  concentration  has  been  implemented  in  breach  of  the 
commitments attached to a decision taken under Article 24(3), point (a), which 
has  found  that,  in  the  absence  of  the  commitments,  the  concentration  would 
distort the internal market; or 

(b) 

a decision has been revoked pursuant to Article 24(1). 

(7) 

Any transaction carried out in breach of paragraph 1 shall be considered valid only 
after a decision pursuant to Article 24(3) has been adopted. 

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(8) 

This Article shall have no effect on the validity of transactions in securities including 
those convertible into other securities admitted to trading on a market such as a stock 
exchange, unless the buyer and seller  were aware or ought to have been aware that 
the transaction was carried out in breach of paragraph 1. 

Article 24  

Procedural rules applicable to the preliminary review and the in-depth investigation of 
notified concentrations 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

Articles  8,  9(1),  (3)  and  (4),  10,  11,  12,  13,  14  and  16  shall  apply  to  notified 
concentrations. 

The  Commission  may  initiate  an  in-depth  investigation  under  Article  8(2)  no  later 
than 25 working days after receipt of the complete notification. 

After  the  in-depth  investigation,  the  Commission  shall  adopt  one  of  the  following 
decisions: 

(a) 

(b) 

(c) 

a decision with commitments pursuant to Article 9(3); 

a no objection decision pursuant to Article 9(4); 

a  decision  prohibiting  a  concentration,  where  the  Commission  finds  that  a 
foreign subsidy distorts the internal market pursuant to Articles 3 to 5. 

Decisions pursuant to paragraph 3 shall be adopted within 90 working days after the 
opening  of  the  in-depth  investigation  at  the  latest,  extended  as  the  case  may  be 
pursuant to Article 23(1), point (b), (4) and (5). If the Commission does not adopt a 
decision  within  that  time  limit,  the  undertakings  concerned  shall  be  allowed  to 
implement the concentration. 

In  any  request  for  information  to  an  undertaking,  the  Commission  shall  specify 
whether  time  limits  will  be  suspended  pursuant  to  Article  23(5),  in  the  event  the 
undertaking fails to provide complete information in the prescribed time limit. 

The  Commission  may,  where  it  finds  that  a  concentration  has  already  been 
implemented  and  that  concentration  has  been  found  to  distort  the  internal  market 
pursuant to Articles 3 to 5 adopt one of the following measures: 

(a) 

require the undertakings concerned to dissolve the concentration, in particular 
through the dissolution of the merger or the disposal of all the shares or assets 
acquired, to restore the situation prevailing prior to the implementation of the 
concentration;  in  circumstances  where  restoration  of  the  situation  prevailing 
before  the  implementation  of  the  concentration  is  not  possible  through 
dissolution of the concentration, the Commission may take any other measure 
appropriate to achieve such restoration as far as possible; 

(b)  order any other appropriate measure to ensure that the undertakings concerned 
dissolve the concentration or take other restorative measures as required in its 
decision. 

The measures referred to  in  points  (a) and (b) may be imposed either in a decision 
pursuant to paragraph 3, point (c), or by separate decision 

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The Commission may adopt any of the measures referred to in points (a) or (b) where 
it  finds  that  a  concentration  has  been  implemented  in  breach  of  a  decision  taken 
pursuant  to  paragraph  (3),  point  (a),  which  has  found  that,  in  the  absence  of  the 
commitments, the concentration would fulfil the criterion laid down in paragraph 3, 
point (c). 

(7) 

The Commission may order interim measures referred to in Article 10 also where: 

(a) 

(b) 

a concentration has been implemented in breach of Article 19; 

a  concentration  has  been  implemented  in  breach  of  a  decision  with 
commitments under this Article, paragraph 3, point (a). 

Article 25  

Fines and periodic penalty payments applicable to concentrations 

(1) 

(2) 

(3) 

The  Commission  may  impose  fines  and  periodic  penalty  payments  as  set  out  in 
Article 15. 

In  addition,  the  Commission  may  impose  by  decision  on  undertakings  concerned 
fines  not  exceeding  1  %  of  their  aggregate  turnover  in  the  preceding  business  year 
where they, intentionally or negligently, supply incorrect or misleading information 
in a notification pursuant to Article 19 or supplement thereto. 

The  Commission  may  impose  by  decision  on  undertakings  concerned  fines  not 
exceeding  10  %  of  their  aggregate  turnover  in  the  preceding  business  year  where 
they, intentionally or negligently: 

(a) 

(b) 

(c) 

fail to notify a notifiable concentration in  accordance with Article  19 prior to 
its implementation, unless they are expressly authorised to do so by Article 23; 

implement a notified concentration in breach of Article 23; 

implement a notified concentration prohibited in accordance with Article 24(3), 
point (c). 

CHAPTER 4: PUBLIC PROCUREMENT PROCEDURES 

Article 26  

Distortions on the internal market by foreign subsidies in public procurement procedures 

Foreign  subsidies  that  cause  or  risk  causing  a  distortion  in  a  public  procurement  procedure 
shall be understood as foreign subsidies that enable an undertaking to submit a tender that is 
unduly advantageous in relation to the works, supplies or services concerned. The assessment 
of  whether  there  is  a  distortion  on  the  internal  market  pursuant  to  Article  3  and  whether  a 
tender is unduly advantageous in relation to the works, supplies or services concerned shall be 
limited to  the public procurement procedure  at  stake. Only  foreign subsidies granted during 
the three years prior to the notification shall be taken into account in the assessment.  

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Article 27  

Definition of and notification threshold in public procurement procedures 

(1) 

For the purposes of Article 28, a public procurement procedure means:  

(a) 

any type of award procedure laid down in Directive 2014/24/EU and Directive 
2014/25/EU of the European Parliament and of the Council for the conclusion 
of  a  public  contract  as  defined  in  Article  2(1),  point  (5)  of  Directive 
2014/24/EU or of a supply, works and service contract as defined in Article 2, 
point (1) of Directive 2014/25/EU;  

(b) 

a  procedure  for  the  award  of  a  works  or  a  service  concession  as  defined  in 
Article 5, point (1) of Directive 2014/23/EU of the European Parliament and of 
the Council;  

(c)  procedures for the award of contracts referred to in  Article 10(4), point (a) of 
Directive  2014/23/EU,  Article  9(1),  point  (a)  of  Directive  2014/24/EU  and 
Article 20(1) point (a) of Directive 2014/25/EU.  

For  the  purpose  of  Article  28,  a  notifiable  foreign  financial  contribution  in  an  EU 
public procurement procedure shall be deemed to arise where the estimated value of 
that public procurement is equal or greater than EUR 250 million.  

Procedures  for  the  award  of  contracts  falling  within  the  scope  of  Directive 
2009/81/EC  of the European Parliament  and of the Council11 do not  fall under this 
Chapter. 

For the purposes of this Chapter, the definitions of the terms “contracting authority” 
in Article 6 of Directive 2014/23/EU Article 2(1) of Directive 2014/24/EU, Article 3 
of  Directive  2014/25/EU,  ,  and  “contracting  entity”  in  Article  7  of  Directive 
2014/23/EU and Article 4 of Directive 2014/25/EU shall apply. 

(2) 

(3) 

(4) 

Article 28  

Prior notification of foreign financial contributions in the context of public procurement 
procedures 

(1) 

(2) 

11 

When  submitting  a  tender  or  a  request  to  participate  in  a  public  procurement 
procedure,  undertakings  shall  either  notify  to  the  contracting  authority  or  the 
contracting  entity  all  foreign  financial  contributions  received  in  the  three  years 
preceding that notification or confirm in  a declaration that they did not receive any 
foreign  financial  contributions  in  the  last  three  years.  Undertakings  which  do  not 
submit such information or declaration shall not be awarded the contract. 

The  obligation  to  notify  foreign  financial  contributions  under  this  paragraph  shall 
extend  to  economic  operators,  groups  of  economic  operators  referred  to  in  Article 
26(2)  of  Directive  2014/23/EU,  Article  19(2)  of  Directive  2014/24/EU  and  Article 
37(2)  of  Directive  2014/25/EU,  main  subcontractors  and  main  suppliers.  A 

Directive  2009/81/EC  of  the  European  Parliament  and  of  the  Council  of  13  July  2009  on  the 
coordination  of  procedures  for  the  award  of  certain  works  contracts,  supply  contracts  and  service 
contracts  by  contracting  authorities  or  entities  in  the  fields  of  defence  and  security,  and  amending 
Directives 2004/17/EC and 2004/18/EC (OJ L 216, 20.8.2009, p. 76). 

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(3) 

(4) 

(5) 

(6) 

subcontractor  or  supplier  shall  be  deemed  to  be  main  where  their  participation 
ensures  key  elements  of  the  contract  performance  and  in  any  case  where  the 
economic  share  of  their  contribution  exceeds  30%  of  the  estimated  value  of  the 
contract. 

For groups of economic operators, main subcontractors and main suppliers, the lead 
economic operator shall ensure notification. 

The  contracting  authority  or  the  contracting  entity  shall  transfer  the  notification  to 
the Commission without delay. 

Where the undertaking, economic operators or groups of economic operators referred 
to  in  paragraph  1  fail  to  notify  a  foreign  financial  contribution,  or  where  such  a 
notification  is  not  transferred  to  the  Commission,  the  Commission  may  initiate  a 
review. 

Where  the  Commission  suspects  that  an  undertaking  may  have  benefitted  from 
foreign subsidies in the three years prior to the submission of the tender or request to 
participate in the public procurement procedure, it may request the notification of the 
foreign  financial  contributions  received  by 
that  undertaking  in  any  public 
procurement procedure which are not notifiable under Article 27(2) or fall within the 
scope  of  paragraph  5  of  this  Article,  at  any  time  before  the  award  of  the  contract. 
Once the Commission has requested the notification of such a financial contribution, 
it is deemed to be a notifiable foreign financial contribution in a public procurement 
procedure. 

Article 29  

Procedural rules applicable to the preliminary review and the in-depth investigation of 
notified financial contributions in public procurement procedures 

(1) 

(2) 

(3) 

(4) 

(1) 

Articles  8,  9  (1),  (3)  and  (4),  11,  12,  13,  14,  16  and  22  shall  apply  to  notified 
financial contributions in public procurement procedures. 

The Commission  shall  carry out  a preliminary  review no later than 60 days after it 
received the notification.  

The Commission shall decide whether to initiate an in-depth investigation within the 
time  limit  for  completing  the  preliminary  review  and  inform  the  undertaking 
concerned and the contracting authority or the contracting entity without delay.  

The  Commission  may  adopt  a  decision  closing  the  in-depth  investigation  no  later 
than  200  days  after  it  received  the  notification.  In  exceptional  circumstances,  this 
time  limit  may  be  extended  after  consultation  with  the  concerned  contracting 
authority or contracting entity. 

Article 30  

Commission decisions  

Where,  after  an  in-depth  investigation,  the  Commission  finds  that  an  undertaking 
benefits  from  a  foreign  subsidy  which  distorts  the  internal  market  pursuant  to 
Articles 3 to 5, and where the undertaking concerned offers commitments that fully 
and effectively remove the distortion on the internal market, it shall adopt a decision 

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with commitments pursuant to Article 9(3). The assessment under Article 5 shall not 
result  in  a  modification  of  the  initial  tender  submitted  by  the  undertaking  that  is 
incompatible with Union law.  

Where  the  undertaking  concerned  does  not  offer  commitments  or  where  the 
Commission  considers  that  the  commitments  referred  to  in  paragraph  1  are  neither 
appropriate nor sufficient to fully and effectively remove the distortion it shall adopt 
a  decision  prohibiting  the  award  of  the  contract  to  the  undertaking  concerned 
(“decision prohibiting the award of the contract”).  

Where,  after  an  in-depth  investigation,  the  Commission  does  not  find  that  an 
undertaking  benefits  from  a  foreign  subsidy  which  distorts  the  internal  market,  it 
shall adopt a decision pursuant to Article 9(4). 

(2) 

(3) 

Article 31  

Evaluations in public procurement procedures involving a notification and suspension of 
award 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

During  the  preliminary  review  and  the  in-depth  investigation,  the  evaluation  of 
tenders  in  a  public  procurement  procedure  may  continue.  The  contract  shall  not  be 
awarded before the expiry of the time limit set in Article 29(2). 

If a decision to open an in-depth investigation is taken pursuant to Article 29(3), the 
contract  shall  not  be  awarded  to  an  undertaking  submitting  a  notification  under 
Article 28 until  the Commission  reaches a decision under Article 30(3) or the time 
limit  set  in  Article  29(4)  elapses.  If  the  Commission  has  not  adopted  a  decision 
within this time limit, the contract may be awarded to any undertaking, including the 
one submitting the notification. 

The  contract  may  be  awarded  to  an  undertaking  submitting  a  declaration  under 
Article 28 before the Commission takes any of the decisions referred to in Article 30 
or  before  the  time  limit  laid  down  in  Article  29(4)  elapses  only  if  the  tender 
evaluation has established that the undertaking in question has in any case submitted 
the most economically advantageous tender.  

Where  the  Commission  issues  a  decision  under  Article  30(2)  regarding  the  most 
economically advantageous tender, the contract  may be awarded to the undertaking 
having submitted the next best tender not subject to a decision under Article 30(2). 

Where the Commission adopts a decision in accordance with Article 30(1) or (3), the 
contract may be awarded to any undertaking having submitted the most economically 
advantageous  tender,  including,  as  the  case  may  be,  the  undertaking(s)  having 
submitted the notification under Article 28. 

In  all  cases,  the  contracting  authority  or  the  contracting  entity  shall  inform  the 
Commission  of  any  decision  relating  to  the  outcome  of  the  public  procurement 
procedure. 

The  principles  governing  public  procurement,  including  proportionality,  non-
discrimination,  equal  treatment,  and  transparency,  shall  be  observed  as  regards  all 
undertakings  involved  in  the  public  procurement  procedure.  The  investigation  of 
foreign  subsidies  pursuant  to  this  Regulation  shall  not  result  in  the  contracting 
authority or the contracting entity treating the undertaking concerned in a way that is 
contrary to those principles.  

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(8) 

Each time limit  shall  begin  on the  working day  following that of the receipt of the 
notification or of the adoption of the relevant Commission decision. 

Article 32  

Fines and periodic penalty payments applicable to financial contributions in the context of 
public procurement procedures 

(1) 

(2) 

(3) 

(1) 

(2) 

(1) 

The  Commission  may  impose  fines  and  periodic  penalty  payments  as  set  out  in 
Article 15. 

In addition, the Commission may impose by decision on the undertakings concerned 
fines not exceeding 1 % of their aggregate turnover in the preceding business year, 
where they intentionally or negligently supply incorrect or misleading information in 
a notification pursuant to Article 28 or supplement thereto; 

The  Commission  may  impose  by  decision  on  the  undertakings  concerned  fines  not 
exceeding  10  %  of  their  aggregate  turnover  in  the  preceding  business  year  where 
they, intentionally or negligently, fail to notify a subsidy in accordance with Article 
28 during the public procurement procedure. 

CHAPTER 5: COMMON PROCEDURAL PROVISIONS 

Article 33  

Relation between procedures 

A  financial  contribution  notified  in  the  context  of  a  concentration  under  Article  19 
may be relevant and assessed again in relation to another economic activity. 

A  financial  contribution  notified  in  the  context  of  a  public  procurement  procedure 
under Article 28 may be relevant and assessed again in relation to another economic 
activity.  

Article 34  

Market investigation 

Where  the  information  available  substantiates  a  reasonable  suspicion  that  foreign 
subsidies in a particular sector, for a particular type of economic activity or based on 
a particular subsidy instrument may distort the internal market, the Commission may 
conduct  a  market  investigation  into  the  particular  sector,  the  particular  type  of 
economic activity or into the use of the subsidy instrument concerned. In the course 
of  that  market  investigation,  the  Commission  may  request  the  undertakings  or 
associations of undertakings concerned to supply the necessary information and may 
carry out the necessary inspections. The Commission may also request the Member 
State or third country concerned to supply information.  

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(2) 

(3) 

The Commission may publish a report on the results of its market investigation into 
particular  sectors,  particular  types  of  economic  activity  or  particular  subsidy 
instruments and invite comments from interested parties. 

The Commission may use the information obtained from such market investigations 
in the framework of procedures under this Regulation. 

(4) 

Articles 11, 12, 13 and 15 of this Regulation shall apply. 

Article 35  

Limitation periods 

(1) 

(2) 

(3) 

(1) 

(2) 

(3) 

The powers of the Commission under Article 9 shall be subject to a limitation period 
of  ten  years,  starting  on  the  day  on  which  a  foreign  subsidy  is  granted  to  the 
undertaking concerned. Any action taken by the Commission under Articles 8, 11, 12 
or  13  with  respect  to  a  foreign  subsidy  shall  interrupt  the  limitation  period.  After 
each interruption, the limitation period shall start to run afresh.  

The powers of the Commission to impose fines and periodic penalty payments under 
Articles 15, 25 and 32 shall be subject to a limitation period of three years, starting 
on the day on which the infringement referred to in Articles 15, 25 or 32 took place. 
In the case of continuing or repeated infringements, the  limitation period shall start 
on the day on which the infringement ceases. Any action taken by the Commission 
with respect to an infringement referred to in Articles 15, 25 or 32 shall interrupt the 
limitation period for the imposition of fines or periodic penalty payments. After each 
interruption, the limitation period shall start to run afresh. 

The  powers  of  the  Commission  to  enforce  decisions  imposing  fines  and  periodic 
penalty payments under Articles 15, 25 and 32 shall be subject to a limitation period 
of five years, starting on the day on which the Commission decision imposing fines 
or periodic penalty payments was taken. Any action taken by the Commission, or by 
a Member State acting upon request of the Commission, intended to enforce payment 
of  the  fine  or  periodic  penalty  payment  shall  interrupt  that  limitation  period.  After 
each interruption, the limitation period shall start to run afresh. 

Article 36  

Publication of decisions 

The Commission shall publish a summary notice of the decisions adopted pursuant to 
Article 8(2). 

The Commission shall publish the decisions adopted pursuant to Article 9(2), (3) and 
(4),  Article  24(3),  and  Article  30(1),  (2)  and  (3)  in  the  Official  Journal  of  the 
European Union.  

When  publishing  summary  notices  and  decisions,  the  Commission  shall  take  due 
account of the legitimate interests of undertakings in the protection of their business 
secrets and other confidential information. 

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Article 37  

Addressees of decisions 

Decisions  adopted  pursuant  to  Articles  8,  9,  15,  24(3),  25,  30(1)  and  32  shall  be 
addressed  to  the  undertakings  or  to  the  association  of  undertakings  concerned.  The 
Commission  shall  notify the decision to  the addressee without delay  and  shall give 
the  addressee  the  opportunity  to  indicate  to  the  Commission  which  information  it 
considers to be confidential. The Commission shall provide the contracting authority 
or  the  contracting  entity  concerned  with  a  copy  of  any  Commission  decision 
addressed to an undertaking participating in a public procurement procedure.   

Decisions  adopted  pursuant  to  Article  30(2)  and  (3)  shall  be  addressed  to  the 
contracting  authority  or  the  contracting  entity  concerned.  The  Commission  shall 
provide the undertaking to which the award of the public contract is prohibited with a 
copy of that decision.   

Article 38  

Disclosure and rights of defence 

The Commission shall, before adopting a decision  pursuant to Articles 9, 15, 24(3) 
point (c), 25, 30(2) or 32 give the undertaking concerned the opportunity to submit 
observations on the grounds on which the Commission intends to adopt its decision.  

The Commission shall base its decision only on grounds on which the undertakings 
concerned have been given the opportunity to submit their observations.  

Article 39  

Professional secrecy 

Information  acquired  under  this  Regulation  shall  be  used  only  for  the  purposes  for 
which it was acquired. 

The Commission, its officials and other persons working under its supervision shall 
not disclose information covered by the obligation of professional secrecy that they 
have acquired under this Regulation. 

Paragraphs  1  and  2  shall  not  prevent  publication  of  statistics  and  reports  which  do 
not contain information allowing to identify specific undertakings or associations of 
undertakings. 

(1) 

(2) 

(1) 

(2) 

(1) 

(2) 

(3) 

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CHAPTER 6: RELATIONSHIP TO OTHER INSTRUMENTS 

Article 40  

Relationship to other instruments 

This Regulation is without prejudice to the application of Articles 101, 102, 106, 107 
and 108 of the Treaty, Council Regulation (EC) No 1/200312 and Council Regulation 
(EC) No 139/200413. 

This  Regulation  is  without  prejudice  to  the  application  of  Regulation  (EU) 
2016/1037 of the European Parliament and of the Council of 8 June 201614.  

This Regulation is without prejudice to the application of Regulation (EU) 2019/452 
of the European Parliament and of the Council15. 

This Regulation takes precedence over Regulation (EU) 2016/1035 of the European 
Parliament and of the Council until that Regulation becomes applicable pursuant to 
its  Article  18.  Where,  after  that  date,  a  foreign  subsidy  falls  within  the  scope  of 
application of both Regulation (EU) 2016/1035 and this Regulation, Regulation (EU) 
2016/1035 
to  public 
procurement and concentrations of this Regulation take precedence over Regulation 
(EU) 2016/1035. 

takes  precedence.  However, 

the  provisions  applicable 

This Regulation takes precedence over Council Regulation (EEC) No 4057/86.  

This Regulation is without prejudice to the application of Regulation (EU) 2019/712 
of the European Parliament and of the Council. Notifiable concentrations, as defined 
in  Article  18  of  this  Regulation,  involving  air  carriers  shall  be  subject  to  the 
provisions of Chapter 3. Public procurement procedures, as defined in Article 27 of 
this Regulation, involving air carriers shall be subject to the provisions of Chapter 4. 

An  investigation  pursuant  to  this  Regulation  shall  not  be  carried  out  and  measures 
shall not be imposed or maintained where such investigation or measures would be 
contrary  to  the  Union’s  obligations  emanating  from  any  relevant  international 
agreement  it  has  entered  into.  In  particular,  no  action  shall  be  taken  under  this 
Regulation  which  would  amount  to  a  specific  action  against  a  subsidy  within  the 
meaning  of  Article  32.1  of  the  Agreement  on  Subsidies  and  Countervailing 
Measures.  This Regulation shall not prevent the Union from exercising its rights or 
fulfilling its obligations under international agreements. 

Council  Regulation  (EC)  No  1/2003  of  16  December  2002  on  the  implementation  of  the  rules  on 
competition laid down in Articles 81 and 82 of the Treaty (OJ L 1, 4.1.2003, p. 1). 

Council  Regulation  (EC)  No  139/2004  of  20  January  2004  on  the  control  of  concentrations  between 
undertakings (the EC Merger Regulation) (OJ L 24, 29.1.2004, p. 1). 

Regulation  (EU)  2016/1037  of  the  European  Parliament  and  of  the  Council  on  protection  against 
subsidised imports from countries not members of the European Union (OJ L 176, 30.6.2016, p. 55). 

Regulation  (EU)  2019/452  of  the  European  Parliament  and  of  the  Council  of  19  March  2019 
establishing  a  framework  for  the  screening  of  foreign  direct  investments  into  the  Union  (OJ  L  79I  , 
21.3.2019, p. 1). 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

12 

13 

14 

15 

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CHAPTER 7: TRANSITIONAL AND FINAL PROVISIONS 

Article 41  

Committee procedure for decisions 

Decisions  pursuant  to  Articles  9,  24(3)  and  30  shall  be  adopted  in  accordance  with  the 
advisory procedure referred to in Article 43(2). 

Article 42  

(1) 

The Commission is empowered to adopt implementing acts concerning: 

Committee procedure for implementing acts 

(a) 

(b) 

the  form,  content  and  procedural  details  of  notifications  of  concentrations 
pursuant to Article 19; 

the  form,  content  and  procedural  details  of  notifications  of  foreign  financial 
contributions in public procurement procedures pursuant to Article 28; 

(c)  details of the disclosure pursuant to Article 38; 

(d) 

the form content and procedural details of transparency requirements; 

(e)  detailed rules on the calculation of time limits; 

(f) 

the conditions and time limits for proposing commitments under Article 30; 

(g)  detailed rules  on the  procedural steps referred to in  Article 28, 29, 30 and 31  

concerning investigations regarding public procurement procedures. 

(2) 

Implementing acts referred to in paragraph 1 shall be adopted in accordance with the 
advisory procedure referred to inin Article 43(2).  

Article 43 

Committee  

(1) 

(2) 

The  Commission  shall  be  assisted  by  a  committee.  That  committee  shall  be  a 
committee within the meaning of Regulation (EU) No 182/2011. 

Where  reference  is  made  to  this  paragraph,  Article  4  of  Regulation  (EU)  No 
182/2011 shall apply. 

Article 44  

Delegated acts 

(1) 

The Commission is empowered to adopt delegated acts for the purposes of: 

(a) 

amending the thresholds for notifications as set out in Articles 18 and 27, in the 
light of the practice of the Commission during the first five years of application 
of this Regulation, and taking into account the effectiveness of application; 

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(b) 

exempting certain categories of undertakings concerned from the obligation to 
notify  pursuant  to  Articles  19  and  28,  in  light  of  the  practice  of  the 
Commission  in  the  first  five  years  of    application  of  this  Regulation,  in  case 
this  practice allows to identify economic activities where foreign subsidies are 
unlikely to distort the internal market; 

(c) 

amending  the  timelines  for  review  and  in-depth  investigations  as  set  out  in 
Articles 24 and 29. 

(2) 

Delegated acts referred to in paragraph 1 shall be adopted in accordance with Article 
45. 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

Article 45  

Exercise of the delegation 

The  power  to  adopt  delegated  acts  is  conferred  on  the  Commission  subject  to  the 
conditions laid down in this Article.  

The power to adopt delegated acts referred to in Article 44 shall be conferred on the 
Commission for an indeterminate period of time  starting two  years after the date of 
entry into force of this Regulation.  

The delegation of power referred to in Article 44 may be revoked at any time by the 
European Parliament or by the Council. A decision to revoke shall put an end to the 
delegation  of  the  power  specified  in  that  decision.  It  shall  take  effect  on  the  day 
following  the  publication  of  the  decision  in  the  Official  Journal  of  the  European 
Union  or  at  a  later  date  specified  therein.  It  shall  not  affect  the  validity  of  any 
delegated acts already in force.  

Before adopting a delegated act, the Commission shall consult experts designated by 
each  Member  State 
the 
in  accordance  with 
Interinstitutional Agreement on Better Law-Making of 13 April 2016.  

the  principles 

laid  down 

in 

As soon as it adopts a delegated act, the Commission shall notify it simultaneously to 
the European Parliament and to the Council.  

A  delegated  act  adopted  pursuant  to  Article  44  shall  enter  into  force  only  if  no 
objection  has  been  expressed  either  by  the  European  Parliament  or  by  the  Council 
within a period of two months of notification of that act to the European Parliament 
and the Council or if, before the expiry of that period, the European Parliament and 
the  Council  have  both  informed  the  Commission  that  they  will  not  object.  That 
period shall be extended by two months at the initiative of the European Parliament 
or of the Council.  

Article 46  

Review 

Within  five  years  after  the  entry  into  force  of  this  Regulation  at  the  latest,  the  Commission 
shall present  a  report to  the European Parliament and the Council on the  application of this 
Regulation,  accompanied,  where  the  Commission  considers  it  appropriate,  by  relevant 
legislative proposals. 

EN 

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Article 47  

Transitional provisions 

(1) 

(2) 

(3) 

(4) 

This Regulation shall apply to foreign subsidies granted in the ten years prior to the 
date  of  application  of  this  Regulation  where  such  foreign  subsidies  distort  the 
internal market after the start of application of this Regulation.  

This  Regulation  shall  apply  to  foreign  financial  contributions  granted  in  the  three 
years prior to the date of application of this Regulation where such foreign financial 
contributions were  granted to  an undertaking notifying a  concentration or notifying 
financial contributions in the context of a public procurement procedure pursuant to 
this Regulation.  

This  Regulation  shall  not  apply  to  concentrations  for  which  the  agreement  was 
concluded,  the  public  bid  was  announced,  or  a  controlling  interest  was  acquired 
before the date of application of the Regulation. 

This Regulation shall not apply to public procurement procedures initiated before the 
date of application of the Regulation. 

Article 48  

Entry into force and date of application 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union.  

It shall apply from [date: six months after entry into force]. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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LEGISLATIVE FINANCIAL STATEMENT 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative 

Regulation  of  the  European  Parliament  and  of  the  Council  on  foreign  subsidies 
distorting the internal market 

1.2. 

Policy area(s) concerned  

Policy area:  Competition/Single Market 

The  budgetary  impact  concerns  the  new  tasks  entrusted  with  the  Commission, 
including the direct supervisory tasks.  

1.3. 

The proposal/initiative relates to:  

 a new action  
 a new action following a pilot project/preparatory action54  

 the extension of an existing action  

 a merger or redirection of one or more actions towards another/a new action  

1.4. 

Objective(s) 

1.4.1.  General objective(s) 

The  general  objective  of  this  initiative  is  to  restore  the  level  playing  field  on  the 
internal market so that it is not distorted by foreign subsidies. 

1.4.2. 

Specific objective(s) 

This initiative has two specific objectives. 

1. 
Identify  the  most  distortive  subsidies:  This  specific  objective  addresses  the 
issue that there is a general lack of information about subsidies at international level 
and that there are no criteria and procedures to assess the potential distortion of the 
EU internal market caused by foreign subsidies. 

Remedy  the distortions  caused by foreign subsidies: This  objective addresses 
2. 
the  issue  that  there  are  no  tools  to  remedy  distortions  caused  by  foreign  subsidies 
once identified. 

1.4.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

Stakeholder group 

Practical implications 

Businesses 

First,  businesses  potentially  benefitting  from  foreign  subsidies  will  be 
the  stakeholders  most  affected  by  the  initiative.  This  may  potentially 
concern  any  undertaking,  namely  undertakings  ultimately  owned  by 
foreign  and  EU  nationals.  The  notification  obligation  introduced  for 
concentrations  and  public  procurement  bids  that  exceed  certain 
thresholds  will result in an administrative burden on these businesses. 

54 

As referred to in Article 58(2)(a) or (b) of the Financial Regulation. 

EN 

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Furthermore, if the Commission initiates an ex-officio investigation in 
all  other  market  situations,  the  undertakings  concerned  will  need  to 
submit  the  requested  information.  If  undertakings  are  found  to  have 
benefitted  from  distortive  foreign  subsidies,  they  will  be  subject  to 
redressive measures such as the repayment of the subsidy.  

Second,  businesses  which  do  not  benefit  from  distortive  foreign 
subsidies  will  benefit  from  the  Regulation  because  it  will  restore  and 
preserve the level playing field in the internal market.  

Thirdly,  the  Regulation  will  not  affect  much  SMEs.  The  notification 
thresholds  are  likely  to  be  too  high  to  affect  them.  Furthermore,  the 
high  threshold  below  which  subsidies  are  unlikely  to  be  distortive  – 
which  is  25  times  higher  than  the  de  minimis  for  State  Aid  –  is  also 
likely to be too high to affect most SMEs.  

Although  consumers  will  not  be  directly  affected  by  the  new 
legislation,  the  Regulation  can  have  a  slightly  negative  economic 
impact on consumers in the short run since it may lead to an increase in 
prices, although this is not expected to be significant.  In the long run, 
however,  consumers  will  benefit  from  ex  ante  control  of  potentially 
subsidised  concentrations.  Notably,  a 
subsidised 
concentrations  can  spur  innovation  and  efficiencies  since  non-
subsidised  undertakings  will  then  have  better  chances  to  achieve 
economies  of  scale.  Moreover,  addressing  distortive  foreign  subsidies 
also  beyond  concentrations  shall  improve  competition  in  the  internal 
market, which ultimately benefits consumers through lower prices and 
better products. 

control  of 

Public authorities from third countries will not be directly affected by 
the Regulation. The Commission as an enforcer may, however, engage 
with  them  as  regards  information  requests  or  more  generally,  in 
consultations throughout the procedure. 

In  general,  this  instrument  may  prompt  third  countries  to  increase 
efforts  to  seek  multilateral  solutions  as  well  as  to  reassess  the  use  of 
subsidies in their investment policies. 

The  Commission  will  be  the  most  affected  public  authority  by  the 
Regulation,  as  the  Commission  will  become  the  sole  enforcer  of  the 
investigative  tools.  Ex-ante  control  of  subsidised  concentrations  may 
require  about  40  FTEs;  ex-ante  control  of  subsidised  bids  in  public 
procurement  45  FTEs  and  ex-officio  control  of  all  other  market 
situations involving distortive foreign subsidies may require around 60 
FTEs.  To  a  much  lesser  extent,  national  authorities  and  contracting 
authorities  are  likely  to  be  affected  by  the  Regulation  in  the  medium 
and  long  term  as  the  Commission  is  likely  to  seek  establishing 
coordination mechanisms with national authorities to better enforce the 
investigative instrument. 

Consumers 

Third country 
States 

Public authorities 

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1.4.4. 

Indicators of performance 

The  proposed  indicators  mainly  rely  on  internal  Commission  data  sources  or 
consultations that will be conducted by the Commission. The initiative is planned to 
be  evaluated  within  5  years  after  entry  into  force.  The  evaluation  will  examine  in 
particular  whether,  and  to  what  extent,  the  Regulation  will  have  contributed  to  the 
improvement  of  the  functioning  of  the  internal  market.  The  indicators  proposed  to 
monitor  the  achievement  of  policy  objectives  pursued  by  this  Regulation  are 
presented below. 

Specific 
objectives 

Identify the 
most 
distortive 
subsidies 

Remove 
distortions 
caused by 
foreign 
subsidies 

Monitoring indicators 

Sources of data and/or data 
collection methods 

Data collected 
already? 

Actors responsible 
for data collection 

The yearly number of cases of 
alleged distortive foreign 
subsidies dealt with by the 
supervisory authority  

Sources of information 
-  Notifications  
-  Third party submissions of 

market information  

-  Ex officio cases 

Share of cases of foreign 
subsidies found to be distortive 
vs. total number of cases  

Record of all final decisions 
finding distortions caused by 
foreign subsidies.  

Share of cases cleared thanks to 
the balancing test vs. total 
number of cases.  

Record of all final decisions 
finding that positive effects 
outweigh the distortions. 

Stakeholder perceptions of the 
impacts of the imposed 
redressive measures  

Consultation with EU 
stakeholders on their 
perceptions of the impacts of 
redressive measures  

No 

Commission 

No 

No 

No 

Commission 

Commission 

Commission 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term including a detailed timeline for 

roll-out of the implementation of the initiative 

The Regulation should be directly applicable. By the time the Regulation starts to be 
applied,  the  Commission  should  put  in  place  effective  procedures  for  the 
enforcement  of  the  Regulation,  in  particular,  for  the  functioning  of  the  ex-ante 
notification systems on potentially subsidised concentrations and public procurement 
bids,  but  also  to  carry  out  market  investigations  and  to  perform  any  other 
investigative, enforcement and monitoring powers.  

Once the Regulation enters into force and information on foreign subsidies becomes 
increasingly  available,  the  Commission  will  build  up  expertise  on the  effectiveness 
of the process. Should the Commission consider, in light of this information, that the 
procedures can be improved, streamlined or simplified, it may decide to modify the 
appropriate  thresholds  or  exempt  certain  categories  of  undertakings  from  the 
obligation to notify through a delegated act.  

The  initiative  is  planned  to  be  evaluated  within  5  years  after  entry  into  force.  The 
evaluation will examine in particular whether, and to what extent, the Regulation will 
have contributed to the improvement of the functioning of the internal market.  

1.5.2.  Added  value  of  Union  involvement  (it  may  result  from  different  factors,  e.g. 
coordination gains, legal certainty, greater effectiveness or complementarities). For 
the purposes of this point ‘added value of Union involvement’ is the value resulting 

EN 

50 

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from  Union  intervention  which  is  additional  to  the  value  that  would  have  been 
otherwise created by Member States alone. 

Reasons for action at European level (ex-ante): 

The  root  cause  of  the  problem  is  the  existence  of  foreign  subsidies,  causing 
distortions in the EU internal market, in the absence of any regulatory mechanism to 
prevent  or  remedy  such  distortions.  While  the  existing  EU  toolbox  includes  some 
rules to deal with foreign subsidies in certain market  circumstances, these rules are 
not sufficient, leaving a ‘regulatory gap’. Since the Union has exclusive competence 
in  the  areas  of  competition  and  common  commercial  policy,  Member  States  are 
unable  to  resolve  the  issue  by  individual  policy  actions.  The  regulatory  gap  is 
described in more detail in sections 1.5.3. and 1.5.4 below. 

Subsidies  are  typically  part  of  broader  industrial  strategies  of  third  countries. 
Countries  have  the  right  to  develop  and  implement  their  own  industrial  policies 
including  the  granting  of  subsidies,  which  may  however  distort  markets  in  other 
countries. According to data recorded by the Global Trade Alert (GTA), the number 
of subsidy measures implemented worldwide has been increasing steadily  in  recent 
years. By the end of 2020, there were 1724 subsidy measures in place implemented 
by the EU’s top five trading partners (China: 205, USA: 999, UK: 104, Russia: 414 
and Switzerland: 2). Three of these countries (USA, Switzerland and China) are also 
the  main  partners  in  terms  of  greenfield  FDI  into  the  EU.  The  same  five  countries 
reported  to  the  WTO  the  following  subsidy  amounts  for  2018:  China  (520  billion 
EUR),  USA  (17  billion  EUR),  Russia  (3.8  billion  EUR),  UK  (888  million  EUR), 
Switzerland  (697  million  EUR).  Evidence  seems  to  suggest  that  these  notified 
amounts  are  underestimated.  The  combination  of  increasing  subsidisation  and  high 
levels  of  trade  and  investment  activity  between  the  EU  and  its  trading  partners 
creates a growing risk of distortions on the EU internal market.   

Expected generated Union added value (ex-post): 

There seems to be an added value of EU action. Notably, the objectives and added 
value of a control of foreign subsidies can be compared to those of the existing State 
aid control i.e. to ensure effective competition and a level playing field in the internal 
market. The compatibility criteria in State aid ensure that the amount of aid is kept to 
the  minimum  necessary  and  proportionate  to  achieving  an  objective  of  common 
interest.  Member  States  are  therefore  prevented  from  spending  excessive  and  thus 
distortive amounts of State aid or from entering into ‘subsidy races’ with each other. 
The  publicly  available  information  on  Member  States’  support  also  fosters  market 
discipline. Such benefits could not be achieved at Member State level.  

Moreover, having a Regulation at EU level allows potential beneficiaries of foreign 
subsidies to know ex ante the rules that the competent supervisory authority will use 
to assess the existence of and possible distortions caused by foreign subsidies. This 
guarantees  predictability  and  increases  the  legal  certainty  of  the  system  across 
different Member States.  

1.5.3.  Lessons learned from similar experiences in the past 

Below  (and  in  the  section  1.5.4.),  an  overview  is  given  of  existing  EU  and 
international instruments in the area of competition, trade, public procurement and in 
certain  sector  specific  legislation,  demonstrating  the  existing  regulatory  gap  to 
address the distortions in the EU internal market caused by foreign subsidies.  

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As regards EU competition rules, EU State Aid rules only apply to financial support 
granted by EU Member States and aim to ensure that EU government interventions 
do not distort competition and intra-EU trade. No such control mechanism exists as 
regards distortive subsidies granted by third countries. The EU merger and antitrust 
rules  aim  to  prevent  significant  distortions  of  competition  due  to  mergers  and 
acquisitions that would create a ‘significant impediment to effective competition’ or 
due to  anticompetitive practices of undertakings. They do not  specifically  take into 
account  whether  an  undertaking’s  conduct,  for  instance  in  the  form  of  anti-
competitive pricing results from or was facilitated by foreign subsidies.  

Furthermore, the FDI Screening Regulation allows Member States to screen foreign 
investments,  which  are  likely  to  have  an  impact  on  a  Member  State’s  security  and 
public  order  by  considering  its  effects  on  critical  assets  and  infrastructure.  The 
Regulation,  however, does  not  specifically tackle the issue of distortions caused by 
foreign subsidies on the internal market.  

As  regards  public  procurement,  the  existing  EU  legal  framework  does  not 
specifically  address  distortions  to  the  EU  procurement  markets  caused  by  foreign 
subsidies.  Directives  2014/24/EU  and  2014/25/EU  allow  contracting  authorities  to 
reject  abnormally  low  offers  if  it  can  be  established  that  a  bidder  has  obtained 
incompatible State aid, but the Directives do not contain any corresponding provision 
for  foreign  subsidies.  In  addition,  while  the  grant  of  foreign  subsidies  can  be 
considered in the overall assessment of a bid, any rejection of an offer as abnormally 
low  needs  to  be  justified  by  demonstrating  that  the  foreign  subsidy  impedes  the 
viability  of  the  offer  and  the  bidder’s  capacity  to  execute  the  contract  at  the 
(abnormally low) price offered.  

The  International  Procurement  Instrument  (IPI)  aims  to  incentivise  trading  partners 
to  negotiate  with  the  EU  the  opening  of  their  procurement  markets  for  EU 
businesses.  Once  adopted,  it  would  enforce  the  principle  of  balanced  reciprocal 
market  access  for  EU  business  to  third  countries’  procurement  markets,  but  it  will 
not be able tackle distortions caused by foreign subsidies within the EU.  

Inter-governmental  agreements  (IGAs)  are  concluded  to  facilitate  investment.  They 
may cover organising procurements intended for joint implementation or exploitation 
of a project, especially in large infrastructure. Such procurements are exempted from 
EU public procurement legislation provided the conditions laid down in Article 9 of 
Directive 2014/24/EU are fulfilled , though they always have to be compatible with 
the  EU  Treaties.  Distortive  effects  of  foreign  subsidies  are  not  specifically 
scrutinised under such agreements.  

1.5.4.  Compatibility  with  the  Multiannual  Financial  Framework  and  possible  synergies 

with other appropriate instruments 

The  initiative  can  be  fully  financed  through  redeployment  within  the  relevant 
heading  of  the  Multiannual  Financial  Framework  (MFF).  The  financial  impact  on 
operational appropriations will be entirely covered by the allocations foreseen in the 
MFF 2021-27 under the financial envelopes of the Single Market Programme. 

The  initiative  will  benefit  from  the  existing  expertise  in  the  areas  of  competition, 
trade defence and public procurement, which may create synergies between existing 
instruments and decrease the necessary costs. 

In the area of trade policy, the WTO SCM Agreement as well as the trade defence 
instruments (TDIs) allow the EU to react to unfair competition in terms of injurious 

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imports of goods which are unfairly priced below their normal value (anti-dumping 
instrument) or subsidised (anti-subsidy instrument). The EU anti-dumping and anti-
subsidy rules, however, only apply to the import of goods and do not cover services, 
investment or other financial flows in relation to undertakings operating in the EU.  

At the international level, the EU can bring litigation against a WTO Member before 
a  WTO  panel  for  breaches  of  the  SCM  Agreement.  However,  the  scope  of 
application of the SCM Agreement is also limited to trade in goods. Subsidies are not 
excluded from the scope of application of the WTO General Agreement on Trade in 
Services  (GATS).  In  fact,  GATS  includes  an  inbuilt  mandate  to  further  negotiate 
disciplines for services subsidies.  

As  regards  bilateral  Free  Trade  Agreements  (FTAs),  there  are  large  differences  as 
regards  the  provisions  on  subsidies.  Most  FTAs  focus  on  transparency  and 
consultations  in  case  of  distortive  subsidies.  Some  include  provisions  prohibiting 
subsidies  considered  particularly  harmful 
(such  as  unlimited  guarantees). 
Agreements signed with some neighbouring countries include the commitment to put 
in place a subsidy control system inspired by EU State Aid rules. Although the scope 
of those agreements is to address subsidies that affect trade between the EU and the 
respective third country, jurisdictions that have in place such subsidy control systems 
are expected to be better placed to identify and address subsidies that distort the EU 
internal  market.  Should  those  cases  occur,  the  FTAs  normally  do  not  provide  for 
timely solutions to address such distortive subsidies.  

Regulation  2019/712  on  safeguarding  competition  in  air  transport  allows  the 
Commission  to  conduct  investigations  if  it  finds  evidence  of  a  practice  distorting 
competition among EU air carriers and in the air transport services markets.  It also 
covers subsidies to  third country air carriers, but not  to  other actors of the aviation 
chain  and  does  not  contain  any  specific  rules  on  public  procurement  or  subsidised 
acquisitions of EU targets.  

Finally, Regulation (EU) 2016/1035 on protection against injurious pricing of vessels 
would allow the EU to act against the sale of vessels that are sold at less than normal 
value and therefore cause injury to the Union industry, if it were to apply. However, 
while  this  Regulation  has  formally  entered  into  force,  it  does  not  apply  before  the 
entry into force of the OECD Shipbuilding Agreement, as set out in Article 18 of that 
Regulation. Given that the OECD Shipbuilding Agreement never entered into force 
(and  is  not  expected  to  do  so)  due  to  insufficient  ratification,  Regulation  (EU) 
2016/1035 does not apply.  

1.5.5.  Assessment  of  the  different  available  financing  options,  including  scope  for 

redeployment 

The  initiative  can  be  fully  financed  through  redeployment  within  the  relevant 
heading  of  the  Multiannual  Financial  Framework  (MFF).  The  financial  impact  on 
operational appropriations will be entirely covered by the allocations foreseen in the 
MFF 2021-27 under the financial envelopes of the Single Market Programme. 

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1.6. 

Duration and financial impact of the proposal/initiative 

 limited duration  

–    in effect from [DD/MM]YYYY to [DD/MM]YYYY  

–    Financial  impact  from  YYYY  to  YYYY  for  commitment  appropriations  and 

from YYYY to YYYY for payment appropriations.  

 unlimited duration 

–  Implementation with a start-up period from 2022 to 2025, 

–  followed by full-scale operation. 
1.7.  Management mode(s) planned55  

 Direct management by the Commission 

–   by its departments, including by its staff in the Union delegations;  

–    by the executive agencies  

 Shared management with the Member States  

 Indirect management by entrusting budget implementation tasks to: 

–   third countries or the bodies they have designated; 

–   international organisations and their agencies (to be specified); 

–   the EIB and the European Investment Fund; 

–   bodies referred to in Articles 70 and 71 of the Financial Regulation; 

–   public law bodies; 

–   bodies governed by private law with a public service mission to the extent that 

they provide adequate financial guarantees; 

–   bodies governed by the private law of a Member State that are entrusted with 
the  implementation  of  a  public-private  partnership  and  that  provide  adequate 
financial guarantees; 

–    persons  entrusted  with  the  implementation  of  specific  actions  in  the  CFSP 

pursuant to Title V of the TEU, and identified in the relevant basic act. 

– 

If more than one management mode is indicated, please provide details in the ‘Comments’ section. 

Comments  

The Commission will be solely responsible for the enforcement of the Regulation. 

55 

Details of management modes and references to the Financial Regulation may be found on the 
BudgWeb site: 
https://myintracomm.ec.europa.eu/budgweb/EN/man/budgmanag/Pages/budgmanag.aspx  

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2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

Specify frequency and conditions. 

The  Regulation  will  be  evaluated  and  reviewed  5  years  after  entry  into  force.  The 
evaluation  will  examine  in  particular  whether,  and  to  what  extent,  the  specific 
objectives  have  contributed  to  the  improvement  of  the  functioning  of  the  internal 
market. The Commission will report on the findings to the European Parliament, the 
Council and the European Economic and Social Committee. 

Moreover, in the context of the enforcement of the new instrument, the Commission 
will continuously monitor the effectiveness  and  efficiency of the measures applied. 
The activities carried out by the Commission in relation to the new Regulation will 
be reported in the Annual Competition Report. 

In  addition,  a  review  may  be  required  if  additional  rules  to  control  the  distortive 
effects of foreign subsidies in the EU internal market are considered, including at the 
international level. 

2.2.  Management and control system(s)  

2.2.1. 

Justification of the management mode(s), the funding implementation mechanism(s), 
the payment modalities and the control strategy proposed 

With  regard  to  the  implementation  of  the  Regulation,  the  Commission  will  be 
exclusively  competent  to  enforce  the  obligations  stemming  from  the  Regulation, 
including the assessment of the notifications of potentially subsidised concentrations 
and bids in EU public procurement procedures.  

If  an  undertaking  fails  to  notify  an  otherwise  notifiable  subsidised  transaction,  the 
Commission  may  impose  penalties  and  fines.  If  the  Commission  concludes  that  a 
foreign  subsidy  distorts  the  internal  market,  it  may  impose  redressive  measures  or 
accept commitments, including the repayment of the foreign subsidy.  

A dialogue between the Commission and undertakings concerned by the application 
of the Regulation may be required to  ensure that the undertakings comply  with  the 
implemented  measures,  including  the  possible  repayment  of  the  subsidy,  fines  or 
other penalties.  

The internal control framework is built on the implementation of the Commission’s 
Internal Control Principles. In line with the requirement of the Financial Regulation, 
an important objective of the Commission’s ‘budget focused on results strategy’ is to 
ensure cost-effectiveness when designing and implementing management and control 
systems which prevent or identify and correct errors.  

The  activities  requiring  financial  resources  will  be  implemented  mainly  through 
public procurement under direct management mode. Therefore the associated legality 
and regularity risks are considered to be (very) low. 

There  will  be  a  constant  link  with  policy  work,  which  will  ensure  the  necessary 
flexibility  for  adapting  the  resources  to  actual  policy  needs  in  an  area  subject  to 
frequent changes. 

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2.2.2. 

Information concerning the risks identified and the internal control system(s) set up 
to mitigate them 

The  following  risks  related  to  the  implementation  of  the  proposed  Regulation  have 
been identified:  

1) Retaliatory action directed at EU companies 

A new legislative instrument may risk retaliation measures by those third countries 
which  perceive  the  option  as  hampering  their  companies.  To  counter  any  such 
concerns, the Regulation is based on principles similar to EU State aid rules, it closes 
an  existing  legal  gap  and  restores  the  level  playing  field  in  the  internal  market. 
Companies from third countries which do not benefit from subsidies are supportive 
of the instrument. The Regulation will apply in an objective and non-discriminatory 
manner to all undertakings active in the EU irrespective of their ownership and thus 
it  will  be  consistent  with  the  EU’s  international  obligations.  The  adoption  of  the 
Regulation  may  also  further  incentivise  non-EU  countries  to  develop  a  State  aid 
control  system  similar  to  the  EU  and  to  (re-)engage  in  negotiations  to  agree  on 
international  rules  for  subsidies,  for  example  under  the  WTO.  In  any  event,  such 
retaliatory  measures  would  likely  not  be  in  line  with  WTO  rules  as  they  would  be 
discriminatory if a third country does not have in place an equivalent system for the 
control of domestic subsidies. 

2) Unexpected increase in administrative burden for companies 

The  Regulation  includes  the  possibility  to  modify  the  appropriate  thresholds  or 
exempt  certain  categories  of  undertakings  from  the  obligation  to  notify  through  a 
delegated act  if certain  notified transactions are found not  to  cause distortions.  The 
risks  associated  with  unnecessary  administrative  burden  could  also  be  minimised 
through a guidance on the application of the Regulation. 

3) Unexpected increase in administrative burden for public authorities 

Enforcing  the  proposed  Regulation  will  result  in  cases  to  be  dealt  with  by  the 
Commission and thus in an increase in administrative costs (labour costs, equipment 
and  material  cost,  as  well  as  overheads).  If  an  unexpectedly  high  number  of 
notifications  is  received,  there  may  be  a  shortage  of  staff,  management  difficulties 
and additional costs. However, the Commission may decide not to take action if the 
case does not raise a systemic issue, nor have a significant impact on the EU internal 
market. 

2.2.3.  Estimation and justification of the cost-effectiveness of the controls (ratio of ‘control 
costs ÷ value of the related funds managed’), and assessment of the expected levels 
of risk of error (at payment & at closure)  

N/A 

2.3.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures, e.g. from the Anti-Fraud Strategy. 

The  prevention  and  protection  measures  focus  on  increasing  transparency  in 
management  meetings  and  contacts  with  stakeholders,  following  the  best  public 
procurement practices, including usage of e-procurement and e-submission tool. The 
actions also will prevent and detect possible conflict of interests. 

EN 

56 

  EN 

 
3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget 
line(s) affected  

  Existing budget lines  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Heading of 
multiannual 
financial 
framework 

Number  

Contribution  

from 
EFTA 
countries
57 

from 
candidate 
countries58 

from third 
countries 

within the 
meaning of 
Article 21(2)(b) of 
the Financial 
Regulation  

03 01 Single Market Programme  

03 02 01 01 Single Market Programme 

03 02 01 05 Single Market Programme 

1 

1 

1 

7 

20 02 06 Other management expenditure 

Non-diff. 

NO 

YES 

NO 

NO 

YES 

YES 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

Type of  
expenditure 

Diff./Non-
diff.56 

Non-
Diff. 

Diff 

Diff 

56 
57 
58 

Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations. 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidates from the Western Balkans. 

EN 

57 

  EN 

 
 
 
 
                                                 
3.2. 

Estimated financial impact of the proposal on appropriations  

3.2.1. 

Summary of estimated impact on operational appropriations  

–    The proposal/initiative does not require the use of operational appropriations  

–    The proposal/initiative requires the use of operational appropriations, as explained below: 

– 

Heading of multiannual financial  
framework  

1 

Single Market Innovation 

2021 

2022 

2023 

2024 

2025 

2026 

2027 

Post 2027 

TOTAL 

EUR million (to three decimal places) 

Operational appropriations  

Operational  appropriations  –  03  02  01  01 
Single Market Programme 

Operational  appropriations  –  03  02  01  05 
Single Market Programme 

Commitments 

Payments 

Commitments 

Payments 

(1a) 

(2a) 

(1b) 

(2b) 

-- 

-- 
-- 

-- 

0,725 

0,775 

0,450 

0,450 

0,450 

0,450 

0,363 
0,725 

0,750 
0,950 

0,613 
0,800 

0,450 
0,600 

0,450 
0,875 

0,450 
0,575 

0,225 

0,363 

0,838 

0,875 

0,700 

0,738 

0,725 

0,288 

Appropriations of an administrative nature financed from the envelope of specific programmes59  
Budget line 

03.010101.02 

-- 

-- 

(3) 

0,175 

   TOTAL operational appropriations  

Commitments 

Payments 

  TOTAL  appropriations  of  an  administrative  nature 
financed from the envelope for specific programmes  

(4) 

(5) 

(6) 

-- 
-- 

-- 

1,450 
0,725 

1,725 
1,588 

0,350 

1,250 
1,488 

0,150 

1,050 
1,150 

0,425 

1,325 
1,188 

0,125 

1,025 
1,175 

0,513 

-- 

0,175 

0,350 

0,150 

0,425 

0,125 

3,300 

3,300 
4,525 

4,525 

1,225 

7,825 
7,825 

1,225 

TOTAL appropriations  

Commitments 

=4+6 

-- 

1,450 

1,900 

1,600 

1,200 

1,750 

1,150 

9,050 

59 

Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research. 

EN 

58 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
  
                                                 
under HEADING 1 
of the multiannual financial framework 

Payments 

=5+6 

-- 

0,725 

1,763 

1,838 

1,300 

1,600 

1,300 

0,513 

9,050 

Heading of multiannual financial  
framework  

7 

‘Administrative expenditure’ 

 Human resources  

 Other administrative expenditure  

TOTAL 

Appropriations  

EUR million (to three decimal places) 

2021 

2022 

2023 

2024 

2025 

2026 

2027 

Post 2027  TOTAL 

-- 

-- 

-- 

3,040 

9,260 

15,480 

17,570 

17,570 

17,570 

0,050 

0,150 

0,150 

0,150 

0,150 

0,150 

3,090 

9,410 

15,630 

17,720 

17,720 

17,720 

80,490 

0,800 

81,290 

TOTAL appropriations 
under HEADING 7 
of the multiannual financial framework  

(Total 
commitments 
Total payments) 

= 

-- 

3,090 

9,410 

15,630 

17,720 

17,720 

17,720 

81,290 

2021 

2022 

2023 

2024 

2025 

2026 

2027 

Post 2027  TOTAL 

EUR million (to three decimal places) 

TOTAL appropriations  
under HEADINGS 1 to 7 
of the multiannual financial 
framework  

Commitments 

Payments 

-- 

-- 

4,540 

11,310 

17,230 

18,920 

19,470 

18,870 

0,000 

90,340 

3,815 

11,173 

17,468 

19,020 

19,333 

19,020 

0,513 

90,340 

EN 

59 

EN 

 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
3.2.2.  Estimated output funded with operational appropriations  

Operational  appropriations  will  be  used  to  finance  the  necessary  IT  infrastructure,  studies  and  consultations  to  ensure  effective 
implementation and enforcement of the instrument. 

It is not possible to provide an exhaustive list of outputs to be delivered by means of financial interventions, average cost and numbers 
as  requested  by  this  section  as  this  is  a  new  initiative  and  there  is  no  previous  statistical  data  to  draw  from.  The  impact  assessment 
accompanying the proposal for a Regulation estimated that there may be around 30 notified cases of subsidised concentration per year, 
around  36  notified  cases  of  subsidised  bids  in  public  procurement  and  between  30-45  ex-officio  cases  per  year  in  other  market 
situations, including concentrations and public procurement procedures below the notification thresholds.  

The Regulation aims at addressing distortions caused by foreign subsidies by: 

1. Identifying the most distortive subsidies; and 

2. Remedying the distortion caused by foreign subsidies. 

These two specific objectives will be monitored using four monitoring indicators as described in section 1.4.4.: 

a. The yearly number of cases of alleged distortive foreign subsidies dealt with by the supervisory authority  

b. Share of cases of foreign subsidies found to be distortive vs. total number of cases  

c. Share of cases cleared thanks to the balancing test vs. total number of cases.  

d. Stakeholder perceptions of the impacts of the imposed redressive measures. 

In addition, the effectiveness of the instrument will be monitored and reported on to ensure cost-effectiveness of the resources used for 
the implementation and enforcement of the Regulation. 

EN 

60 

EN 

 
 
 
 
3.2.3. 

Summary of estimated impact on administrative appropriations  

–    The  proposal/initiative  does  not  require  the  use  of  appropriations  of  an 

administrative nature  

–    The proposal/initiative requires the use of appropriations of an administrative 

nature, as explained below: 

EUR million (to three decimal places) 

2021 

2022 

2023 

2024 

2025 

2026 

2027 

TOTAL 

HEADING 7 
of the multiannual 
financial framework 

Human resources  

Other administrative 
expenditure  

Subtotal HEADING 7 
of the multiannual 
financial framework  

Outside HEADING 760 
of the multiannual 
financial framework  

Human resources  

Other expenditure  
of an administrative 
nature 

Subtotal  
outside HEADING 7 
of the multiannual 
financial framework  

-- 

-- 

-- 

-- 

-- 

-- 

3,040 

9,260 

15,480 

17,570 

17,570 

17,570 

80,490 

0,050 

0,150 

0,150 

0,150 

0,150 

0,150 

0,800 

3,090 

9,410 

15,630 

17,720 

17,720 

17,720 

81,290 

-- 

-- 

-- 

-- 

-- 

-- 

-- 

-- 

-- 

0,175 

0,350 

0,150 

0,425 

0,125 

1,225 

0,175 

0,350 

0,150 

0,425 

0,125 

1,225 

TOTAL 

-- 

3,090 

9,585 

15,980 

17,870 

18,145 

17,845 

82,515 

The  appropriations  required  for  human  resources  and  other  expenditure  of  an  administrative  nature  will  be  met  by 
appropriations from the DG that are already assigned to management of the action and/or have been redeployed within the 
DG,  together  if  necessary  with  any  additional  allocation  which  may  be  granted  to  the  managing  DG  under  the  annual 
allocation procedure and in the light of budgetary constraints. 

60 

Technical  and/or  administrative  assistance  and  expenditure  in  support  of  the  implementation  of  EU programmes 
and/or actions (former ‘BA’ lines), indirect research, direct research. 

EN 

61 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.1.  Estimated requirements of human resources  

–    The proposal/initiative does not require the use of human resources.  

–    The  proposal/initiative  requires  the  use  of  human  resources,  as  explained 

below: 

Estimate to be expressed in full time equivalent units 

2021 

2022 

2023 

2024 

2025 

2026 

2027 

post-
2027 

 Establishment plan posts (officials and temporary staff) 

20 01 02 01 (Headquarters and Commission’s Representation 
Offices) 

20 

50 

80 

80 

80 

80 

80 

20 01 02 03 (Delegations) 

01 01 01 01  (Indirect research) 

 01 01 01 11 (Direct research) 

Other budget lines (specify) 

 External staff (in Full Time Equivalent unit: FTE)61 

20 02 01 (AC, END, INT from the ‘global envelope’) 

20 

40 

65 

65 

65 

65 

20 02 03 (AC, AL, END, INT and JPD in the delegations) 

XX 01  xx yy zz  62 

- at Headquarters 

- in Delegations  

01 01 01 02 (AC, END, INT - Indirect research) 

 01 01 01 12 (AC, END, INT - Direct research) 

Other budget lines (specify) 

TOTAL 

20 

70 

120 

145 

145 

145 

145 

XX is the policy area or budget title concerned. 

The human resources required will be met by staff from the DG who are already assigned to management of the 
action  and/or  have  been  redeployed  within  the  DG,  together  if  necessary  with  any  additional  allocation  which 
may  be  granted  to  the  managing  DG  under  the  annual  allocation  procedure  and  in  the  light  of  budgetary 
constraints. 

Description of tasks to be carried out: 

Officials and temporary staff 

Monitor  compliance  with  the  new  Regulation,  carry  out  relevant  case  work,  draft 
decisions, conduct market investigations. 

External staff 

Monitor  compliance  with  the  new  Regulation,  provide  assistance  to  officials  and 
temporary  staff  in  carrying  out  relevant  case  work,  drafting  decisions,  conducting 
market investigations. 

Handling  IT  project  management,  including  the  notification  portal  and  document 
management system. Providing clerical support to the relevant case teams. 

61 

62 

AC=  Contract  Staff;  AL  =  Local  Staff;  END=  Seconded  National  Expert;  INT  =  agency  staff; 
JPD= Junior Professionals in Delegations.  
Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines). 

EN 

62 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.4.  Compatibility with the current multiannual financial framework  

The proposal/initiative: 

–    can be fully financed through redeployment within the relevant heading of the 

Multiannual Financial Framework (MFF). 

The  initiative  can  be  fully  financed  through  redeployment  within  the  relevant  heading  of  the 
Multiannual Financial Framework (MFF). The financial impact on operational appropriations will be 
entirely covered by the allocations foreseen in the MFF 2021-27 under the financial envelopes of the 
Single Market Programme. 

–    requires use of the unallocated margin under the relevant heading of the MFF 

and/or use of the special instruments as defined in the MFF Regulation. 

–    requires a revision of the MFF. 

3.2.5.  Third-party contributions  

The proposal/initiative: 

–    does not provide for co-financing by third parties 

–    provides for the co-financing by third parties estimated below: 

Appropriations in EUR million (to three decimal places) 

Year 
N63 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary 
to show the duration of the 
impact (see point 1.6) 

Total 

Specify  the  co-financing 
body  

TOTAL appropriations 
co-financed  

63 

Year N is the year in which implementation of the proposal/initiative starts. Please replace "N" by the 
expected first year of implementation (for instance: 2021). The same for the following years. 

EN 

63 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.3. 

Estimated impact on revenue  

–    The proposal/initiative has no financial impact on revenue. 

–    The proposal/initiative has the following financial impact: 

–   on own resources  

–   on other revenue 

– 

please indicate, if the revenue is assigned to expenditure lines  

revenue 

Budget 
line: 
Chapter  42  –  fines  and 
penalties 

Appropriations 
available for 
the current 
financial year 

Article …………. 

     EUR million (to three decimal places) 

Impact of the proposal/initiative64 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary to show 
the duration of the impact (see point 1.6) 

Other  remarks  (e.g.  method/formula  used  for  calculating  the  impact  on  revenue  or  any  other 
information). 

The amount of the revenue cannot be estimated in advance as it concerns fines on undertaking for not 
complying with obligations laid down in the Regulation.  

64 

As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net 
amounts, i.e. gross amounts after deduction of 20 % for collection costs. 

EN 

64 

  EN