October 24, 2024 15:00

The FSR stipulates the EUs right to review the economic activities of non - EU enterprises in the EU, such as mergers and acquisitions, government procurement, etc. If an enterprise violates this regulation, it will not be able to carry out acquisitions in the EU and will not be allowed to participate in public tender projects. This mainly targets the financial support provided by foreign governments to their enterprises to ensure that such support does not distort the fair competition environment in the EU market.
Concerns and feedback triggered by the FSR

The European Union - China Business Association has submitted written feedback to the European Commission, expressing the concerns of Chinese - funded enterprises. It believes that the FSR may have a discriminatory impact on Chinese - funded enterprises and affect their fair competition environment in Europe. In addition, the main impact points of this regulation are on mergers and acquisitions, while the impact on government procurement is relatively small.
Situations triggering FSR investigations

According to the provisions of the FSR, if a companys annual turnover exceeds 500 million euros, and the subsidies received from third - party countries in the past three years exceed 50 million euros, or the subsidies received from third - party countries when bidding for EU public tender projects exceed 4 million euros, it needs to be declared. The European Commission has the right to investigate whether these enterprises have received foreign subsidies that may distort the market.
How to make a declaration

The FSR clarifies the types of foreign subsidies that need to be declared, including: subsidies for rescuing enterprises on the verge of bankruptcy, guarantees with unlimited amount or term, export financing measures that do not conform to the OECD, subsidies directly facilitating specific merger and acquisition transactions, etc.
Coping strategies for Chinese enterprises

It is recommended that Chinese enterprises sort out their financial data in advance, especially conduct a screening of historical subsidies, and cooperate with lawyers and accountants to formulate compliance strategies to deal with possible reviews. For enterprises hoping to invest in Europe, they especially need to pay attention to the relevant provisions of the FSR and make preparations in advance.
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