There are various ways in which third parties could seek enforcement of the FSR. First and foremost, the FSR allows for complaints. Third parties may also be subject to the EU Commission's measures for gathering information as addressees of RFIs or by being interviewed or even raided by the Commission. They may also express their views when the Commission invites the public after it decides to open an in-depth investigation. Finally, third parties may also challenge the Commission's substantive decisions if they are directly and individually concerned.
A plausible basis for private enforcement
For the most part, the FSR does not contain provisions that would be eligible to have direct effect. Although targeted at distortive foreign subsidies, the FSR does not prohibit them. Its substantive test – not focusing on whether the subsidies are distortive, but whether the negative effects may be counterbalanced – makes the rules of the FSR largely unsuitable for direct effect.
Furthermore, the FSR lacks a state-aid-like general notification obligation. Notifications are required only for specific above-threshold transactions or tenders. Foreign subsidies not meeting these thresholds are permitted (until any Commission decisions under their ex officio powers to the contrary). Therefore, as a matter of principle, no general standstill obligation that could be enforced by third parties is foreseen in the FSR.
On the other hand, there is no doubt that the undertakings will face a notification obligation if the thresholds under the M&A and public procurement tools of the FSR are met. Accordingly, there is a standstill obligation for concentrations that must be notified to the Commission and for awards of contracts in above-threshold tenders. Notification and standstill obligations go hand in hand. They are also sufficiently clear to establish direct effect, meaning that third parties should be able to rely on them in private claims (if the obligations in the specific situation are relevant to them).
Additionally, if the Commission issues a decision under the FSR, the addressees are, unsurprisingly, obliged to act in compliance with it. A breach of this obligation can, in principle, also be enforced privately by a third party. This also extends to interim measures imposed by the Commission according to Art 12 FSR.
Taking the example of private enforcement of EU competition law, we assume that claims for cease-and-desist orders (particularly if breaches of standstill obligations are argued) or claims for specific performance (forcing the defendant to, e.g. notify a notifiable concentration) will be pursued in practice. Claims requiring restitution, either following a breach of a standstill obligation or requiring the return of the financial contribution of third countries, can also be brought. Finally, requests for preliminary injunctions can also become an option for third parties disadvantaged by distortive foreign subsidies, which are subject to a negative decision of the Commission or appear in the context of breaching a notification or standstill obligation, even connected to interim measures.
The text is based on the authors' earlier editorial opinion for EU Law Live's Competition Corner published at: https://eulawlive.com/competition-corner/private-enforcement-of-the-foreign-subsidies-regulation-by-volker-weiss-and-jan-kupcik/.