Under a new EU regulation bidders, especially those belonging to large international groups, will soon have to carefully verify, for each tender worth from €250 million, whether their group (or their principal subcontractors and suppliers) have not received public aid outside the EU (referred to as ‘foreign subsidies’) exceeding €4 million in the last three years.

If so, it will be necessary to report those foreign subsidies to the contracting authority during the tender, under pain of a penalty of up to 10% of the annual turnover. The contracting authority will, in turn, have to notify the European Commission and refrain from awarding the contract until the Commission assesses (in principle within 20 days) whether the foreign subsidies granted to the tenderer’s group outside the EU complies with EU law. In the event of a negative assessment of these subsidies, the Commission will be able to prohibit the award of the contract to the tenderer concerned.The Commission will likewise be able, on its own initiative (for example as a result of a complaint received from competitors), to examine foreign subsidies granted in third countries also in the case of contracts below the threshold of €250 million.

The new rules, which will probably apply in full from 2023, will be of key importance for bidders from or operating in third countries, who, in the event of receiving foreign subsidies outside the EU, will have to take into account new formalities in tender procedures in the EU (due to the necessity to submit a statement on foreign subsidies obtained outside the EU), as well as possible allegations and complaints from other businesses, including particularly EU companies.

We have already introduced the draft of the EU regulation in previous alerts and podcasts.