EU regulation on subsidies from third countries

In accordance with Regulation (EU) 2022/2560 of December 14, 2022, on foreign subsidies distorting the internal market ("Foreign Subsidies Regulation"), the European Commission has the power to review financial contributions granted by non-EU states to companies operating in the European Union. If it identifies foreign subsidies that distort the internal market, the European Commission can act to remedy these distortions. The regulation has implications for public procurement procedures with an estimated contract value of at least EUR 250 million, and we would like to make potential participants in such procedures aware of this here. 

What are the obligations for applicants and tenderers?
As of October 12, 2023, economic operators participating in a public procurement procedure with an estimated contract value of at least EUR 250 million are required in accordance with Article 29 of Regulation (EU) 2022/2560 to submit,

1. in addition to their request to participate, later updated with their final tender, if it is a multi-stage procedure (e.g. competitive negotiated procedure), or
2. in addition to their tender if the procedure is an open procedure or not a multi-stage procedure,

a notification or declaration of foreign financial contributions within the meaning of Articles 28(1)(b) and 29(1) of Regulation (EU) 2022/2560. Where a procurement procedure is divided into lots, this shall apply to an economic operator competing for lots with a total value of at least EUR 125 million (besides a value of the procurement procedure of at least 250 million).

If a joint tender is submitted by several economic operators, notifications or declarations must be made by each individual member of the group. The same shall apply for main subcontractors and main suppliers within the meaning of Article 29(5) of Regulation (EU) 2022/2560. A subcontractor or supplier shall be considered a main subcontractor or a main supplier if its participation ensures key elements of the contract performance and in any case where the economic share of its contribution exceeds 20 % of the value of the tender submitted. The notification or declaration is submitted jointly on a single form.Economic operators shall ensure the submission of the notification or declaration. They are only responsible for the veracity of data linked to their own foreign financial contributions.

How do applicants and tenderers know if a procurement procedure falls within the scope of the regulation?

In its contract notice or, where a procedure is conducted without prior publication, in its invitation to tender, the contracting entity will inform the economic operators of the fact that in the procurement procedure in question they are subject to the notification obligations set out in Regulation (EU) 2022/2560. Notwithstanding the above, it remains the obligation of economic operators tendering for a contract to comply with the obligations under the Regulations.

In what format must the notification or declaration be submitted?

For notifications or declarations of foreign financial contributions, Form FS-PP as found in Annex II of Commission Implementing Regulation (EU) 2023/1441 of July 10, 2023 must be used. Up-to-date information on the format is available on the website of the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW).

What consequences can applicants and tenderers expect if they do not comply with the obligations?

If, despite the existing obligation, the economic operator submits neither a notification nor a declaration truthfully and completely, it may lead to them being excluded from the procurement procedure or to other measures.

Where can more information be found?

For further details on Regulation (EU) 2022/2560 and the obligations resulting from it, economic operators are referred to the above-mentioned Implementing Regulation and to the official websites of the European Commission (e.g. https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/europe-fit-digital-age/european-industrial-strategy/foreign-subsidies-regulation_en and https://single-market-economy.ec.europa.eu/single-market/public-procurement/foreign-subsidies-regulation_en).