10 key aspects of the notification form for concentrations under the Foreign Subsidies Regulation


On 10 July 2023, the European Commission adopted the Implementing Regulation and the notification form for concentrations under the Foreign Subsidies Regulation (EU) 2022/2560 (FSR), shortly before the FSR starts to apply on 12 July 2023. The FSR requires companies (regardless of where they are domiciled) to notify certain transactions to the European Commission once the relevant thresholds are met and to wait with the implementation of the transaction until they have obtained clearance. An obligation to notify exists, inter alia, if the target company is established in the EU and generates EU-wide turnover of at least EUR 500 million and if the parties to the transaction were granted combined financial contributions of more than EUR 50 million from third countries (i.e. non-EU countries) during the last three years preceding the conclusion of the transaction agreement, the announcement of the public bid or the acquisition of the controlling interest ("the last three years"), as the case may be.

The rules regarding the mandatory notification of transactions above the thresholds apply to all transactions for which the agreement was concluded on 12 July 2023 or later, unless the transaction will be fully implemented before 12 October 2023.

Form FS-CO specifies the information, which companies must submit to the European Commission in the context of a FSR notification, and these are ten key aspects of Form FS-CO:

1. Major distinction: "blacklisted" financial contribution or not?

The reporting requirements under Form FS-CO depend on whether or not a financial contribution over the last three years falls within the "blacklist" of Art. 5(1) points a)-d) FSR. Art. 5(1) points a)-d) FSR indicates categories of financial contributions that are most likely to distort the internal market (such as those granted to ailing undertakings, those directly facilitating a concentration or unlimited guarantees). If a certain financial contribution "may fall" into one of these categories and the value of the individual financial contribution is EUR 1 million or more, extended information must be provided in Section 5 of Form FS-CO.

2. Financial contributions that are not blacklisted

For all financial contributions that do not fall in any of the categories of Art. 5(1) points a)-e) FSR, only reduced information must be provided under a table attached to Form FS-CO ("Overview Table"). The Overview Table requires the companies to group the different financial contributions per third-country and to indicate(i) the type of financial contribution (such as direct grant, loan/financing instrument/repayable advances, tax advantage, guarantee, risk capital instrument, equity intervention, debt write-off, contributions provided for the non-economic activities of an undertaking or other), (ii) the purpose of the financial contribution and the granting entity, and (iii) the estimated aggregate of the financial contributions granted by the same third-country (Form FS-CO provides for ranges to be used, EUR 45 – 100 million, EUR > EUR 100 – 500 million, EUR > 500 – 1,000 million, more than EUR 1,000 million).

The reporting obligations under the Overview Table are even further reduced as outlined in the following points 3 – 8.

3. Only individual financial contributions of EUR 1 million or more must be reported

No reporting obligation at all (i.e. not even under the Overview Table) applies regarding individual financial contributions which are below EUR 1 million.

4. Sale and purchase of goods or services on market terms in the ordinary course of business

Companies do not have to provide information regarding financial contributions in the context of the provision/purchase of goods and services (except for financial services), which are made at market terms in the ordinary course of business, for example in the course of a competitive, transparent and non-discriminatory tender procedure.

5. General deferrals of tax payments, social security contributions, etc.

Companies do not have to provide information regarding general deferrals of tax payments and social security contributions, tax amnesties and tax holidays as well as normal depreciation and loss-carry forward rules. However, if these measures are limited to certain sectors, regions or (types of) companies, they must be reported under the Overview Table.

6. Tax reliefs for the avoidance of double-taxation

Companies do not have to provide information regarding tax reliefs for avoidance of double taxation in line with provisions of bilateral or multilateral agreements on avoidance of double taxation, as well as unilateral tax reliefs for avoidance of double taxation applied under national tax legislation to the extent they follow the same logic and conditions as the provisions of bilateral or multilateral agreements.

7. Relief for investment funds

In case of a concentration by an investment fund or by a legal entity controlled by or via an investment fund, financial contributions granted to other investment funds managed by the same investment company but with a majority of different investors measured according to their entitlement of profit (or granted to proftolio companies controlled by these other funds) do not have to be reported provided that (i) the investment fund is subject to Directive 2011/61/EU or equivalent third-country legislation, and (ii) there are no or limited economic and commercial transactions (e.g. sale of assets, loans, credit lines, guarantees, ownership in companies) between the investment fund and other investment funds managed by the same investment company.

8. Aggregate amount of financial contribution by a particular third country in the last three years of less than EUR 45 million

Companies do not have to provide information regarding financial contributions by a particular third-country if the estimated aggregate amount of financial contributions granted by the third-country in the last three years is less than EUR 45 million. For the calculation of this threshold, financial contributions, which do not have to be reported according to points 3 – 7 above, do not need to be taken into account.

9. Description of the bidding process still required

Form FS-CO foresees that the notifying parties must provide information if the acquisition occurs in the context of a structured bidding process, such as a description of the bidding process. However, the reporting obligations are significantly reduced compared to the former draft Form FS-CO.

10. No reporting obligation under Form FS-CO does not affect relevance for the notification thresholds

It is important to note that even if no reporting obligation under Form FS-CO applies to certain financial contributions, these financial contributions still have to be taken into account for the calculation of the notification thresholds of Art. 20 FSR.

The FSR provides for a grace period insofar as no notification requirement applies to all concentrations, which are closed before 12 October 2023. If a particular transaction does not benefit from this rule, and is caught by the notification obligation in general, it is advisable to seek pre-notification contact with the European Commission in order to agree on the scope of information to be provided under Form FS-CO, as it is standard procedure under Form CO in the context of merger control proceedings.

For more information, contact your CMS client partner or local CMS experts: Dr. Michael Bauer, Dr. Christian Haellmigk, Dr. Björn Herbers, Christoff Soltau, Claire Vannini.