Merger Control, Foreign Direct Investment and Foreign Subsidies Regulation

Agreeing conditions precedent and deal timelines has always been a challenge for companies. From an EU perspective, companies previously only had to consider whether a deal led to an EU or Member State merger control filing obligation. However, there are now three new layers of complexity for companies to consider in the EU:

1. Article 22 and ex-post assessments: a new approach to the EU's merger control referral mechanism together with the ex-post review of transactions has added complexity to consider when entering into a new deal.


2. Foreign Direct Investment (FDI): 23 EU Member States now have an FDI regime which if the filing thresholds are met give rise to a notification requirement and clearance prior to closing Sweden is the most recent EU Member State to adopt an FDI regime which came into force on 1 December 2023.


3. Foreign Subsidies Regulation (FSR): as of 12 July 2023, transactions in the EU may also be subject to a further pre-closing review of broadly defined financial contributions from non-EU Member States.

Key takeaways

• Following the introduction of new regulation in 2023 and recent policy changes, companies need to deal with three new layers of complexity in the EU.


• A new approach to the EU's merger control referral mechanism together with the ex-post review of transactions has added complexity to consider when entering into a new deal eroding thus legal certainty.


• Companies need to undertake a complete FDI assessment, covering now almost all EU Member State jurisdictions.


• In addition, as of 2023, the European Commission will be able to review transactions in which the purchaser has benefited from foreign subsidies in an effort to tackle foreign subsidies that cause distortions and undermine the level playing field in the internal market.


• Early engagement with antitrust and regulatory counsel is required for risk assessment to ensure a holistic approach and minimal burden parties with the aim to avoid impact on transaction.

Paul Johnson, Tom Jenkins, Dimitrios Stefanou and a team of associates outline in this leadership piece how deal teams can navigate through this regulatory landscape and manage clients' expectations.