Foreign Subsidies

On January 9, 2025, the Ministry of Commerce of the People’s Republic of China (“MOFCOM”) released its decision in a trade and investment barrier investigation into the European Union’s Foreign Subsidies Regulation (“FSR”).

In 2024, the FSR’s first year in operation saw a large number of filings but limited enforcement, with only a handful of Phase 2 reviews, one conditional merger clearance and two ex officio cases. With the FSR now up and running, in 2025, we expect the EC’s focus to be on demonstrating the FSR’s value and delivering practical results by stepping up enforcement, building a corpus of reasoned decisions, and – it is hoped – developing a more streamlined process for non-issue cases.

On September 24, 2024, the European Commission (EC) conditionally approved, under the Foreign Subsidies Regulation (FSR), the acquisition of PPF Telecom Group (PPF) by Emirates Telecommunications Group Company PJSC (e&).[1]  The EC’s clearance is subject to commitments valid for 10 years, which may be extended by another 5 years.  This is the EC’s first Phase II conditional clearance decision under the FSR, which started to apply on July 12, 2023.[2].

On December 5, 2023, the CJEU overturned the judgment of the General Court,[1] which upheld the Commission decision of June 20, 2018 finding that Luxembourg had granted unlawful State aid of €120 million to Engie.[2] 

On November 23, 2023, the Court of Justice (“ECJ”) delivered two important judgments in the Ryanair v. Commission cases concerning Ryanair’s challenge of two State aid schemes granted by France and Sweden to airlines holding “national operating licenses”[1] during the COVID-19 pandemic.[2]  

On November 9, 2023, Advocate General Pitruzzella delivered his Opinion,[1] proposing that the Court of Justice uphold the appeal brought by the European Commission (“Commission”)[2] against the General Court judgment of July 15, 2020,[3] which annulled the Commission decision of August 30, 2016, finding that the Republic of Ireland (“Ireland”) had granted €13 billion in undue tax benefits to Apple Inc (“Apple”).[4]  The Commission had found that Ireland granted a selective advantage to Apple through two individual tax decisions (“tax rulings”[5]) adopted in 1991 and 2007, addressed to the Irish-based subsidiaries, Apple Sales International (“ASI”), and Apple Operations Europe (“AOE”) (together, “the Irish branches”).  As AG Pitruzzella pointed out, this case is part of a “series of somewhat extensive cases concerning the application of Article 107(1) TFEU to tax rulings.”[6]

On October 12, 2023, the notification obligations under the EU Foreign Subsidies Regulation (FSR) took effect.  Businesses must notify all M&A deals (if signed on or after July 12 and not yet implemented by October 12) and public procurement tenders (for offers submitted on or after October 12) meeting the relevant thresholds.