Mandatory Reporting of Offshore Subsidies for Companies Entering the EU from October

Notification of Third-Country Subsidies Required for Mergers and Public Bidding Participation
Ministry of Industry: "Our Opinions Largely Reflected"

Starting from October 12, foreign companies participating in mergers and acquisitions or public procurement within the European Union (EU) will be required to compulsorily report any 'third-country subsidies' they have previously received.

On the 10th (local time), the European Commission announced the final draft of the implementing act for the EU Foreign Subsidies Regulation containing these provisions. The EU Foreign Subsidies Regulation stipulates that the European Commission evaluates market distortion and decides on approval.

Companies subject to merger notification must report if the participating companies have sales of over 500 million euros within the EU and have received foreign subsidies exceeding 50 million euros over three years. For public procurement notification, the procurement value must be over 250 million euros and foreign subsidies received over three years must exceed 4 million euros.

The implementing act disclosed this time regulates the format, procedures, and data submission forms of the Foreign Subsidies Regulation, which came into effect on January 12. The draft was released in February this year, and after a public consultation process, the final draft was decided. Our government and industry submitted their positions through written opinions during the consultation period for the draft (February 6 to March 6).

The Ministry of Trade, Industry and Energy evaluated that the final draft reflects the opinions of our government and industry significantly compared to the draft. A ministry official explained, "The scope of data submission by companies has been partially reduced, and the criteria for exemption from submission have been relaxed. Also, if the Commission decides to disclose confidential information submitted by companies, a prior objection procedure is established, strengthening companies' right to defense." However, the ministry noted that some uncertainties remain, such as the market distortion criteria guidelines not yet being announced.

An official from the ministry stated, "Our government has actively communicated with the industry by holding explanatory sessions on the EU Foreign Subsidies Regulation and has presented opinions to the EU on various occasions. Going forward, we plan to continue consultations with the EU to minimize the burden on our companies by holding online seminars and company briefings hosted by the Korea International Trade Association in July, and by maintaining communication with the industry regarding the application of the EU Foreign Subsidies Regulation."

[Image source=Yonhap News]

This content was produced with the assistance of AI translation services.