In brief

The new EU Foreign Subsidies Regulation will have a significant impact on the acquisitions of companies across the EU. Our latest alert summarizes the key requirements imposed by the new regime.


  1. Notifiable M&A transactions
  2. Broad definition of a financial contribution
  3. Penalties
  4. Our M&A team

Companies conducting business in the European Union who benefit from non-EU state support will be subject to new notification obligations for M&A transactions that will be implemented on or after 12 October 2023. The new set of rules laid down in the Foreign Subsidies Regulation is meant to allow the EU to take action against non-EU subsidies distorting competition on the EU internal market.

Notifiable M&A transactions

The European Commission will conduct assessments of those M&A transactions that exceed certain financial thresholds. Transactions must be notified for prior approval (and cannot be implemented until the approval is granted) if:

  1. The target company (in case of an acquisition), at least one of the merging companies (in case of a merger), or the planned joint venture is established in the EU and has an aggregate annual EU-wide turnover of at least EUR 500 million.
  2. The involved parties received, in aggregate, third-country financial contributions exceeding EUR 50 million in the prior three financial years.

Broad definition of a financial contribution

The concept of a third-country financial contribution is broadly defined. It encompasses contributions granted either directly or indirectly by a non-EU country (through public or private entities) that confer a benefit on specific businesses or industries. A financial contribution is not limited to transfers of funds (such as capital contributions, grants, loans, or loan guarantees), but also includes tax exemptions, as well as the purchase or provision of goods or services that are not paid for in line with normal market conditions.


Fines for non-compliance mirror competition law penalties. Failure to notify a transaction may result in a fine in the amount of up to 10% of the group's global annual turnover.

Where the Commission finds that a notifiable transaction has already been implemented and that the foreign subsidies relating to such transaction distort the EU internal market, the Commission may order a reversal of the transaction.

Practical tips

In order to prepare for the new regulation, we strongly recommend to:

  1. Create a repository to keep track of financial contributions from non-EU countries going back to 2018.
  2. Create a record of potential justifications to show that the positive effects of any financial contributions (above the EUR 200,000 threshold) going forward will outweigh any negative effects in the EU and document why such contributions were made on market terms where feasible.
  3. Create a streamlined process when considering M&A transactions in the EU. This should involve properly quantifying and evaluating third-country financial contributions received by the parties to determine as early as possible whether the proposed transaction is notifiable.
  4. The transaction documentation should factor in the time to obtain the required approvals, as well as the risks associated with a potential in-depth investigation.

Baker McKenzie has developed an interactive tool to help companies define, categorize and map financial contributions. Contact the individuals below or your usual Firm relationship contacts to find out more.

Our M&A team

As part of our M&A advisory, the Baker McKenzie team in Prague is ready to guide you through any potential filings of your deal with the regulators, including:

  • Merger control clearance with any competition authority.
  • Foreign investment clearance with the Czech Ministry of Industry and Trade.
  • Foreign subsidy clearance with the European Commission.

With 2,500 deal lawyers globally across 44 jurisdictions we are also ready to assist with virtually any cross-border or domestic filing.