The so-called ‘Foreign Subsidy Regulations,’ introduced by the EU to prevent third-country subsidy beneficiaries from distorting competition in the EU single market, will take effect on the 12th (Thursday).The regulations will actually be applied from July.
The foreign subsidy regulation considers all financial support legally or practically provided by third-country governments or public institutions to private companies. Companies are obligated to report subsidy issues in the event of mergers and acquisitions or public procurement bids for EU companies.
According to the regulations, companies that report false information will be fined 1% of sales and those with unreported companies will be fined 10%.Furthermore, sanctions such as prohibition of mergers and acquisitions or restrictions on participation in public procurement will be imposed.
The EU executive will announce details for implementation of regulations such as M&A and public procurement reporting methods, deadlines, and access to confidential information through implementation legislation, which will be finalized around the middle of this year after sharing opinion with stakeholders for four weeks.
Following the regulations, the executive committeemay start an ex-officio investigation on subsidies that may cause market distortion from July 12.Each company will be obligated to report in accordance with the regulations from October 12.