Foreign Subsidies

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. 

The French Ministry for Economy has blocked under FDI rules U.S.-based leading provider of fluid motion and control products and services Flowserve Corporation’s (“Flowserve”) USD 245 million proposed acquisition of Velan Inc (“Velan”), a Canada-based leading provider of industrial steel valves.[1]  

On June 8, 2023, Advocate General Kokott delivered her opinion on the Commission’s appeal of the General Court’s judgment annulling the Commission’s decision finding that Luxembourg had granted unauthorized State aid to Amazon in the form of a tax advantage. [1]  Advocate General  Kokott’s opinion endorsed the recent Court of Justice’s findings in Fiat,[2] which confirmed that there is no EU-wide arm’s length principle that the Commission can use as a standard of review for Member States’ tax decisions under EU State aid rules.  This opinion signals that the Fiat judgement will likely be the guide for ongoing and future tax ruling cases and investigations.