International Legal Perspective | Declaration of Concentration of Business Operators in EU Countervailing Regulation
Published:
2024-07-10
This paper makes a comprehensive analysis of the declaration of concentration of operators in the EU's Countervailing Regulations from the aspects of the background of FSR, the declaration criteria, declaration procedures, review mechanism and considerations, as well as the response suggestions of Chinese enterprises.
The EU Countervailing Regulation (Regulation on Government Subsidies from Non-EU Member States that May Distort the EU Market, Foreign Subsidies Regulation, FSR) has had a profound impact on the competitive environment in the EU market since its entry into force on July 12, 2023. Among them, as an important part of FSR, the declaration of concentration of operators not only regulates M & A transactions, but also strictly supervises economic activities such as investment and bidding from the perspective of fair competition. This paper will make a comprehensive analysis of the declaration of concentration of operators in the EU's Countervailing Regulations from the aspects of the background of FSR, the declaration criteria, declaration procedures, review mechanism and considerations, as well as the response suggestions of Chinese enterprises.
1. FSR Background and Overview
FSR is an important regulation formulated by the EU to deal with the distorting impact of government subsidies from non-EU countries on the EU market. The FSR provides three new regulatory tools, including two specific ex ante review tools (operator concentration declaration and public procurement declaration) and a broad ex post investigation tool. Among them, the declaration of concentration of business operators is one of the core contents of FSR, which requires M & A transactions that meet certain conditions to be declared to the European Commission (European Commission, EC) and approved before implementation.
2. the Declaration Standard of Concentration of Business Operators in FSR
The declaration of concentration of operators means that when a merger and acquisition transaction meets certain conditions, the parties to the transaction are required to submit declaration materials to the EC in order to obtain the EC's assessment of whether the transaction may exclude or restrict market competition. The term "operator" here includes enterprises, partnerships, associations and other entities engaged in economic activities, while "operator concentration" refers to the change of control of operators through mergers, acquisitions, joint ventures and other means.
According to the FSR, the criteria for the declaration of concentration of business operators mainly include two aspects: the turnover standard and the subsidy standard.
3. the procedure of declaration of concentration of business operators in FSR
Review Mechanism and Considerations of Concentration of Undertakings in 4. FSR
Review mechanism
The centralized declaration review mechanism under FSR includes two links: pre-declaration and post-investigation. Prior reporting requires that transactions that meet the conditions be declared and approved by the EC before implementation; post-investigation allows the EC to initiate an investigation on its own initiative after discovering a situation that may distort market competition or initiate an investigation after a third-party complaint. This dual review mechanism ensures a stable and fair competitive environment in the EU market.
2. Considerations
When reviewing the declaration of concentration of business operators, EC will comprehensively consider a number of factors to determine whether the transaction may exclude or restrict market competition, including the amount and nature of foreign subsidies, the market position of operators, the impact of transactions on market competition, and the purpose and conditions of foreign subsidies.
Suggestions on 5. Chinese Enterprises to Declare the Concentration of Business Operators in FSR
Summary
The declaration of concentration of business operators in the EU Countervailing Regulation has an important impact on the M & A activities of Chinese enterprises in the EU market. Chinese enterprises should strengthen their awareness of compliance, assess legal risks in advance, actively establish contact with EC, actively seek professional legal support, and employ experienced anti-monopoly lawyers to better understand the relevant provisions and requirements of FSR, formulate corresponding compliance strategies, respond to EC review and handle possible legal disputes, and ensure that the legitimate rights and interests of enterprises in the EU market are protected.
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