A Guide To The EU Foreign Subsidies Regulation And What It Means For Sport

The apparent lack of interest, or the alleged difficulties, by football-governing bodies (with the recent exception of Manchester City’s referral for alleged breaches of Premier League financial rules[1]) in tackling the way state-owned clubs are operating in European football may soon change with the newly enacted Regulation on foreign (as in non-EU) subsidies distorting the internal market[2] (FSR).

Under the FSR, which applies equally to all sectors of the economy and all companies active in the EU, the Commission will (as of 12 July 2023) be able to launch investigations; while a notification obligation for mergers and acquisitions will apply from 12 October 2023.

The FSR has been conceived to supplement, or rather to close the gap in, the array of trade and competition law instruments available to date to foster the prosperity and resilience of the EU by ensuring that the Single Market remains strong, open and competitive. In the author’s view, by targeting foreign subsidies that could distort the internal market if an undertaking benefitting from them engages in an economic activity in the EU, the FSR is very likely to become a useful tool to address the ways that state-owned clubs may be distorting competition and preventing a level playing field in European football.

The FSR will enter into force in July 2023; with draft implementing regulations being consulted on from 6 February to 6 March[3], the publication of which is planned for the second quarter of 2023.  This article examines the FSR and how it may apply to the sports sector:

• Purpose and scope
• Enforcement
• Investigative powers of the Commission
• What is regarded as a ‘foreign subsidy’?
• The tools at the disposal of the European Commission
• Application of the FSR: procedure, and substantive assessment
• The implementing regulation, and the guidelines for the substantive application of the FSR
• In the face of a finding that a foreign subsidy distorts the internal market, what are the measures available to the Commission?
• Entry into force, retrospective applicability, and maximum prescriptive periods
• How might the FSR affect the sports sector (and in particular football)?