As of 14 March, the Competition Council (CC) will have a new function under the Foreign Subsidies Regulation (FSR). The new function of the CC provides for the obligation to carry out inspections and other procedural actions at the request of the European Commission (EC) or to provide support to the EC in carrying out inspections in Latvia, ensuring a level playing field for all companies in the internal market.

Regulation No. 2022/2560 of the European Parliament and of the Council on foreign subsidies (FSR) entered into force one year ago, on 12 January 2023, and from 12 January this year the obligation for Member States to assist the EC in investigating FSR infringements in their territories came into force. The aim of the FSR is to ensure a fair competitive environment for all companies operating in the EU’s internal market by preventing foreign (non-EU) subsidy recipients from distorting competition, for example by taking advantage in acquisitions or public procurement procedures.

The FSR obliges companies to report foreign subsidies granted to them to the EC. For example, in the case of mergers, a transaction must be notified if one of the market players has an EU turnover of at least EUR 500 million and has received more than EUR 50 million of foreign subsidies in the last three years. Similarly, in the case of public procurement, foreign funding must be notified to the EC when the estimated value of the procurement, excluding value-added tax, is at least EUR 250 million or if the tenderer has been awarded subsidies of more than EUR 4 million in the last three years. In situations where companies fail to cooperate with the EC by not providing or providing false information, the EC will be entitled to request support from the CC in Latvia. By supporting the implementation of the FSR in Latvia, the CC will support the EC in investigating infringements by using all its investigatory powers under the Competition Law in accordance with the investigatory procedures provided for in the Law. Further information on the EC’s and the CC’s roles and the obligations of companies under the FSR is available on the CC’s website under “Foreign Subsidies Regulation”.

Juris Gaiķis, Chairman of the CC: “The new function provides that where the application of the FSR will affect the jurisdiction of Latvia, the CC will have the right to carry out inspections or other fact-finding activities at the request of the EC to support the EC in its investigations aimed at preventing distortions of the internal market.”