EU Commission publishes draft of the Implementing Regulation of the Foreign Subsidies Regulation

As we reported on 9 February 2023, the European Commission (“EC”) has published its draft Implementing Regulation (“Draft IR”) on the Foreign Subsidies Regulation (“FSR”).

The Draft IR seeks to clarify practical and procedural aspects of the application of the FSR and contains essential guidelines for the notification of public procurement procedures. In particular, undertakings need to notify during public procurement procedures foreign subsidies above certain thresholds (see our previous news alert).

In the event of non-compliance, companies will be subject to fines and periodic penalty payments. In addition, companies are now subject to a reporting obligation under which they must provide the EC with all facts relevant to the decision on the public procurement procedure.

Main provisions regarding procurement procedures

Notification 

Article 5 of the Draft IR stipulates that foreign financial contributions in public procurement procedures must be submitted to the contracting authority or contracting entity in charge of the relevant public procurement procedure in a certain manner on a single form, whose form is prescribed in the Annex 2 to the Draft IR.

Moreover, there is provision for a possible exemption for companies from the obligation to provide certain information and documents for the notification. The requirement for this is, in addition to a written request to the EC, the agreement of the contracting authority or contracting entity in charge of the procurement procedure as well as the EC’s finding that compliance with these obligations or requirements is not necessary for the examination of the case.

Effective date of notifications and declarations

As stated in Article 7 of the Draft IR, in open public procurement procedures, notifications and declarations will become effective on the date on which they are received by the EC, after having been completed.

In addition, the notifying person or company has an updating obligation. After submitting a notification or declaration, the person or company must notify the EC without delay of any relevant new information, which they would have had to notify if they had known or ought to have known that information at the time of the submission.

Information from the contracting authorities and contracting entities

Furthermore, Article 11 of the Draft IR clarifies Article 13(5) of the FSR by specifying that the obligation of Member States referred to in the Article to provide the EC, upon its request, with all information necessary to conduct inspections under Regulation 2022/2560 extends in particular to contracting authorities and contracting entities responsible for the procurement procedures concerned, their staff and any external experts who have information relevant to the investigation.

What happens next?

The Draft IR is subject to consultation and open for feedback until 6 March 2023. The adoption of the regulation is planned for the second quarter of 2023. Based on stakeholders’ input, the EC will then adopt a final version of the IR in the second quarter of 2023. We encourage all companies active in public contracts to engage in the consultation and to contribute their views on the Draft IR.