Foreign Subsidies Regulation (FSR)
The Foreign Subsidies Regulation (FSR) is a new regulatory instrument of the European Union for the control of third-country subsidies. It aims to ensure fair competitive conditions in the internal market by subjecting financial contributions from third countries, as well as other economic benefits from third countries, to regulatory scrutiny under certain conditions.
For companies, consideration of the FSR is becoming increasingly important. In particular, M&A transactions and participation in public procurement procedures may be subject to regulatory control under the FSR.
For companies, this means: Transactions and procurement procedures may be delayed, prohibited, or made subject to conditions. At the same time, significant risks arise from incomplete or incorrect information regarding financial contributions from third countries. Early and sound advice is therefore crucial to minimise regulatory risks and ensure security in the context of transactions and procurement procedures.
We provide comprehensive advice to companies on all issues relating to the FSR in Austria, as well as in cross-border matters.
Legal advice concerning the FSR
The FSR affects a wide range of business scenarios. Our advice begins at an early stage and accompanies you throughout the entire process – from the initial assessment to the conclusion of the procedure.
Sound legal support is particularly necessary for:
- M&A and transactions: In the context of M&A, we assess whether a merger exists within the meaning of the FSR and whether corresponding notification requirements apply. This particularly concerns corporate acquisitions in the EU, especially when investors from third countries are involved.
- Public procurement procedures: Companies are required to disclose comprehensive information regarding financial contributions from third countries in the context of public procurement procedures.
- Support for review procedures: We represent your interests in the FSR review procedure before the European Commission – from the preliminary review by the European Commission to an in-depth review.
Our expertise concerning the FSR
Our advice for companies is interdisciplinary and practice-oriented. We combine regulatory know-how with extensive transactional experience and strategic advice.
We support all steps in FSR-relevant transactions or procurement procedures.
We coordinate complex FSR review procedures and communication with the European Commission.
Our advice takes into account legal requirements as well as economic objectives.
Through close integration with competition law, state aid law and public procurement law, we offer integrated solutions.
Risks and sanctions
The FSR regime is characterised by strict requirements and far-reaching intervention powers of the European Commission. Companies that fail to comply with regulatory requirements expose themselves to significant risks. Early legal involvement significantly minimises these risks and creates planning security:
- FSR review procedures: Procedures can lead to significant delays in transactions and procurement procedures. The European Commission can prohibit transactions or approve them only subject to conditions. Companies may be excluded from participation in public procurement procedures.
- Reversal of transactions: Transactions that have already been completed can be reversed.
- Fines and liability: Contraventions of licensing requirements or incorrect or incomplete information can lead to substantial fines. Contraventions can also give rise to personal liability risks for management.
Interfaces with adjacent areas of law
The FSR does not stand in isolation, but is closely linked to other areas of law:
- M&A: FSR requirements influence the structure, timing and completion of transactions.
- Competition law: Parallel review procedures in merger control law and under the FSR require coordinated strategies.
- State aid law: The FSR complements EU state aid law with an external dimension with regard to third-country subsidies.
- Public procurement law: The FSR is of central importance for participation in public procurement procedures.
- Compliance and Governance: The identification and documentation of third-country subsidies is an integral part of modern compliance systems.
References & Success Stories
We successfully advise national and international clients on complex transactions involving approvals under the FSR:
Legal advice on the acquisition of Rosenbauer
SAXINGER has advised the consortium comprising Pierer Industrie, Mark Mateschitz and RLB Oberösterreich on the majority acquisition of the firefighting equipment manufacturer Rosenbauer. The transaction also included advice on investment control law as well as assistance with a notification procedure under the FSR.
Legal advice on the investment by Knill, Invest AG and RLB Steiermark in Pankl
SAXINGER has advised the KNILL Group, Invest AG and RLB Steiermark, as an Austrian consortium, on their investment in Pankl Racing Systems AG. As part of the transaction, the consortium jointly acquired two-thirds of the shares in the Styrian technology company from Pierer Industrie AG. The advice also included a comprehensive review of a possible notification requirement under the FSR.
Contribution to the further development of the practical application of the FSR
Our expertise was brought in as part of a study on the Foreign Subsidies Regulation, initiated by the European Commission, which addressed its practical application as well as its further development. Based on our experience with FSR notification requirements regarding mergers and public procurement procedures, we were consulted as a selected market participant. Our contributions were incorporated, in particular, into the analysis of practical challenges, regulatory burdens, and approaches to simplify and further develop practical application.
Contact
The requirements of the Foreign Subsidies Regulation make proactive legal support essential. We review potential notification requirements for you and support you with transactions – in a structured and efficient manner. SAXINGER is here for you in Graz, Linz, Salzburg, Vienna and Wels and supports you with all questions relating to the FSR.