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Entry into force of foreign subsidies regulation On 12 January 2023, the new Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market ("Regulation 2022/2560") came into force. Regulation 2022/2560 is directly applicable in all Member State of the European Union and covers all companies operating in the EU internal market, including those applying for public contracts.
Regulation 2022/2560 applies from 12 July 2023. From this date, the European Commission will be able to initiate proceedings ex officio to review foreign subsidies in terms of the distortions they cause in the internal market. The requirement for undertakings to notify such subsidies in the context of concentrations and public procurement will, however, arise on 12 October 2023. In the context of public procurement procedures, Regulation 2022/2560 will only apply to procedures initiated after 12 July 2023.
Regulation 2022/2560 applies to all economic activities in the internal market that are undertaken by undertakings benefiting from foreign subsidies.
The concept of foreign subsidies is broadly defined as financial contributions made by a third (non-EU) country that may benefit a particular undertaking or industry while distorting competition in the internal market. It is indicated only by way of example that such contributions may be capital injections, grants, loans, loan guarantees, debt forgiveness, tax exemptions, the granting of special or exclusive rights without adequate remuneration and the provision or purchase of goods and services.
Regulation 2022/2560 places particular emphasis on concentration transactions and public procurement procedures :
To ensure a level playing field throughout the internal market and consistency in the application of this Regulation, the Commission is the sole authority competent to apply this Regulation. The Commission should have the power to examine any foreign subsidy, to the extent it is in the scope of this Regulation, in any sector of the economy on its own initiative, relying thereby on information from all available sources. To ensure effective control, in the specific case of large concentrations (mergers and acquisitions) and public procurement procedures above certain thresholds, the Commission should have the power to review foreign subsidies based on a prior notification by the undertaking to the Commission. (preamble to Regulation 2022/2560)
In the case of public procurement, an economic operator's obligation to notify a financial contribution will arise if:
Financial contributions should include those received by both the economic operator and its subsidiaries without commercial autonomy, holding companies, and main subcontractors and suppliers. Under the Regulation, a subcontractor or supplier is deemed to be main where they ensure key elements of the contract and in any case where the economic share of their contribution exceeds 20 % of the value of the submitted tender.
Contracts awarded pursuant to Article 346 of the TFEU are excluded from the application of Regulation 2022/2560.
For contracts in the field of defence and security awarded under Directive 2009/81/EC, the European Commission may only initiate a foreign subsidy review procedure ex officio.
Moreover, a foreign subsidy will not distort the internal market if it is aimed at making good the damage caused by natural disasters or exceptional occurrences.
Regulation 2022/2560 introduces two types of foreign subsidy proceedings. First, the European Commission will always be able to initiate proceedings ex officio by requiring an undertaking to submit an ad hoc notification to that effect (irrespective of whether the contract is covered by or excluded from the Directives – except in cases covered by Article 346 of the TFEU ). Second, as part of any public procurement procedure where the value exceeds the thresholds set, undertakings will be required, together with their tender, to notify the European Commission of all subsidies received.
Regulation 2022/2560 provides for two types of document that undertakings will have to submit:
The notification requirement will apply not only to individual economic operators, but also to a group of economic operators (consortium) and to the main subcontractors and suppliers known at the declaration/notification stage (documents will be submitted on their behalf by the consortium leader/economic operator).
Upon receipt of the documents, the Commission will carry out the relevant proceedings in which it will be able to (1) request the necessary information from the economic operator, (2) interview a natural or legal person and (3) carry out an inspection within or outside the EU. The Commission may also impose fines and penalty payments on economic operators that do not comply with Regulation 2022/2560 .
Proceedings will comprise two stages:
In total, therefore, proceedings may take 160 business days from the economic operator submitting the notification to the Commission issuing a decision.
Proceedings before the EC will end with one of three types of decision:
Pending the Commission's decision, the Contracting Authority will be able to take all actions in the procurement procedure apart from awarding the contract (signing the contract). The Commission's decision to prohibit the award of the contract will result in the rejection of the economic operator's tender and, if it was the most advantageous, in the Contracting Authority selecting the next best tender. In the case of the other two decisions, the Contracting Authority will be able to award the contract to such economic operators.
The decision taken by the Commission is of a one-off nature and will not be binding in future contract award procedures. Subsidies will be reviewed again each time.
We therefore recommend that entities operating in the area of public procurement in the EU analyse any financial contributions received by the undertaking from third countries over the past three years. The undertaking should include in its analysis not only the subsidies it has received, but also the financial contributions received by subsidiaries, holding companies, and main subcontractors and suppliers. We also recommend that procedures be developed to allow participation in EU procurement procedures in line with the new rules, including procedures to select consortium members, subcontractors and suppliers.
From 25 May 2018 the General Data Protection Regulation (GDPR) applies in Poland and other European Union countries. We would therefore like to give you several details on the subject of how DZP processes personal data.
The administrator of the personal data is Domański Zakrzewski Palinka Sp.k. (“DZP”; address: Rondo ONZ 1, 00-124 Warszawa). Data are processed for contact purposes and to impart information on changes to provisions and authority practices and on other issues, including events concerning day-to-day legal, economic and cultural issues, inter alia, by sending DZP newsletters. The above is carried out on the basis of legitimate interests, i.e. in accordance with art. 6(1)(f) of the GDPR. Data can also be processed where necessary for the conclusion or performance of a contract and for compliance with a legal obligation to which DZP is subject, i.e. pursuant to art. 6(1)(b) and (c) of the GDPR. Data can be transferred to entities with whose help DZP achieves the indicated aims, including entities maintaining IT infrastructure. Giving data is voluntary and in contractual relations is a requirement for concluding and performing a contract. It is possible to object to data processing, request access to, rectification and erasure of personal data or restriction of processing and data portability. Data are kept until an objection is made, and in contractual relations – throughout the term of the contract and thereafter for a period specified in provisions on archiving and limitations period for claims. Anyone has the right to file a complaint with the President of the Personal Data Protection Office. Questions concerning privacy at DZP can be sent to DZP’s Data Protection Inspector, Macieja Maciejewskiego, at: email@example.com.
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