Since 2023, companies bidding for large public contracts within the European Union have been subject to new obligations under Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market.
The purpose of this Regulation is to ensure a level playing field between companies operating in the EU market and those that benefit from financial support granted by non-EU countries. In practice, this means that businesses receiving foreign subsidies must disclose this information when participating in high-value public procurement procedures.
Who does the regulation apply to?
The new rules do not apply to all tenders. They are relevant only where both of the following conditions are met:
- the estimated contract value is at least EUR 250 million, and
- the bidder, its non-autonomous subsidiaries, parent companies, and main subcontractors or suppliers involved in the same tender have received combined financial contributions of at least EUR 4 million from a single non-EU country over the past three years.
In practical terms, the Regulation mainly affects large infrastructure, technology, and strategic supply projects. Although the EUR 250 million threshold limits its scope, internationally active companies – particularly those with non-EU ownership or financing – should carefully review their funding sources.
What is the obligation?
Where both conditions are met, the bidder must submit a declaration to the contracting authority detailing all foreign financial contributions received. This information must be provided together with the tender offer.
The contracting authority then forwards the data to the European Commission, which may conduct a preliminary review and, if necessary, initiate an in-depth investigation. The purpose of such an investigation is to determine whether the foreign subsidy has distorted competition in the EU internal market.
Following its assessment, the Commission may issue one of the following decisions:
- no objection, if it considers the subsidy not to distort competition,
- commitments decision, accepting undertakings proposed by the company to remedy any distortion, or
- prohibition decision, preventing the award of the contract to the bidder if the foreign subsidy confers an undue competitive advantage.
Why is this important for businesses?
These rules require companies to maintain greater control over financial flows originating from non-EU countries, even when such funds are not directly related to public procurement activities. The disclosure obligation covers all types of foreign financial contributions, including capital injections, grants, loans, and state-backed guarantees, whether received directly or indirectly.
In practical terms, compliance may require businesses to:
- develop internal procedures for recording and tracking foreign financial support,
- ensure transparency within corporate groups regarding external financing and ownership structures.
Key points to consider
Companies planning to participate in large public tenders within the EU should already be conducting an audit of their funding sources and developing procedures to monitor potential foreign subsidies. It is also advisable to ensure that responsibility for these matters is clearly assigned within the organisational structure.
Regulation (EU) 2022/2560 signals the European Union’s intention to strengthen the protection of its internal market against unfair competition. For businesses, this means greater transparency — but also the need for careful preparation for the new public procurement environment.