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MP 2024/2 - ‘If the FSR can contribute to fairness of competition on the EU internal market, it is worth the effort’ – interview with DG Comp’s Eddy De Smijter

MP 2024/2 - ‘If the FSR can contribute to fairness of competition on the EU internal market, it is worth the effort’ – interview with DG Comp’s Eddy De Smijter

mDdG
mr. D.J.M. de GraveJudge at the court of Rotterdam and member of the editorial board of this journal.
mYdV
mr. Y. de VriesPartner at Houthoff and member of the editorial board of this journal.
Bijgewerkt tot 29 maart 2024

Eddy De Smijter recently took on the role of Head of Unit at the European Commission's new directorate for the Foreign Subsidies Regulation (FSR). In this role, he heads the Commission's enforcement of the FSR on all matters, except for public procurement. On 12 February 2024, exactly four months after the notification obligations introduced by the FSR started to apply, MP's editorial board sat down with De Smijter. Together, they discussed the Commission's initial experiences, delving into organisational challenges, the coordination of application of the FSR, cooperation with Member States and third States alike and finally an outlook on the future of subsidy control.

1. You recently took on the role of Head of Unit for the Foreign Subsidies Regulation. Could you tell us about your career path and what brought you to this position?

When I joined the Commission, twenty-three years ago, I joined DG Competition. I was lucky enough to be involved in the negotiations on Regulation (EU) 1/2003,1 which is the basic procedural regulation for the Commissions’ antitrust proceedings and which forms the basis for the European Competition Network (ECN) of the Commission, together with the national competition authorities. Subsequently, I was involved in the setting up of the ECN and its first years of development. Later on, I moved to the file on damages actions following the judgment of the Court of Justice of the European Union (CJEU) in Courage Crehan.2 At that time, I was leading the negotiation team for the Commission on the European Damages Directive.3 Next, I was involved in the preparatory work for the ECN+ Directive,4 that was proposed in order to step up the competences of the national competition authorities in the enforcement of the EU competition rules. Then I moved on to the international scene. I went from the ECN to the International Competition Network, where I have now been for the last seven years. From March onwards I will move to the new directorate on the Foreign Subsidies Regulation (FSR) as head of one of the three units in that directorate.

2. You mention there will be a separate directorate now for foreign subsidies. How many colleagues do you expect to be joining you at this directorate and could you explain how it will be organised?

A directorate at the Commission typically has forty colleagues. We will be formally organised in three units but intend to operate on a project base, meaning that for every project, which can be a case or a policy development, a team will be set up to take it further. A management team will be responsible for the management of the directorate as a whole.

3. We understand that the enforcement of the FSR is split between DG COMP and DG GROW and that the latter will be responsible for matters of public procurement. Could you tell us more about the background of this split and whether this gives rise to organisational difficulties?

Well, we have had that split already since the drafting of the Commission White Paper, because public procurement rules within the European Union are very technical and thus require a specific expertise. In DG COMP we do not have that expertise. Our colleagues of DG GROW do, and since the FSR chapter on public procurement refers back to the EU rules on public procurement in terms of scope, they are better placed when it comes to enforcing the FSR provisions on public procurement.

Obviously, concepts are used in the FSR chapter on public procurement that are identical or similar to concepts elsewhere in the FSR, and both DG COMP and DG GROW are committed to ensuring a coherent interpretation of those overlapping concepts. The fact that two DGs are enforcing the FSR should thus not lead to any incoherence in the application of the FSR. We regularly meet to discuss those common concepts, both on the more abstract policy level and in concrete cases. So there are mechanisms in place to ensure coherence.

4. Moving on to the enforcement of the FSR as such. The notification obligations under the FSR apply as of 12 October last year. We have not seen any announcements of notifications in the Official Journal yet, but we understand that a number is currently in pre-notification. Is that number in line with your expectations?

Giving a number is always delicate, because I know that numbers tend to fix the mind. In the impact assessment of the FSR proposal, we made an estimate of the number of cases that we would receive under the FSR, based on our merger database. By 12 February, exactly four months after the notification obligations started to apply, we received twenty-one notifications. That would bring us to about sixty cases per year, which is slightly more than what we had foreseen. In any case, the estimate we made in the impact assessment was based on incomplete information. So, that is where we are now.

5. Could you describe your initial experience with the notification procedure? What have been the main challenges?

6. Have you also received consultation requests yet on, for example, the question of jurisdiction?

7. You shared your recommendation to opt for pre-notification as much as possible. Do you have other recommendations for (pre-)notifying parties?

8. That brings us to gun-jumping. The Commission could enforce against gun-jumping by using the ex officio investigation instrument and by adopting interim measures. What will that enforcement look like?

9. Next to the notification obligations, what can you say on the Commission’s power to open an ex officio investigation?

10. Do you expect informants to fulfil an important role in potentially triggering the opening of ex officio investigations?

11. When do you expect that the first decisions under the FSR will be adopted and can we expect the version of these decisions which will be published in the Official Journal to contain substantial reasoning that could provide guidance for other cases?

12. We understand that guidelines on the substantive tests for the FSR will be published. Are these the Q&As on concepts that you are referring to, or will there be a separate set of guidelines?

13. We already spoke about concepts of the FSR being quite similar to the EU State aid rules. Do you expect differences in interpretation and, if so, why?

14. In addition, access to information of third countries and of companies in third countries is more important under the FSR than under State aid rules. How do you expect the Commission to approach these issues and resolve any problems that you may run into with third countries?

15. That is a nice bridge to the next question which, indeed, concerns the role of DG TRADE in the application of the FSR. Does the Commission coordinate the (parallel) application of the FSR and EU Trade instruments?

16. Similarly, how do you envisage coordination when merger control (the EUMR) and the FSR are applied in parallel to the same concentration?

17. We noticed you have been active in setting up contact networks with Member States. Do you envisage the sharing of information between the Commission and Member States via the setting up of a network of experts of Member States for the application of the FSR, as you have set up for the enforcement of competition law in the past?

18. The FSR also provides for an instrument for cooperation with third countries at certain instances. In what situations would you expect this kind of cooperation to arise?

19. To wrap up, what do you see as your main personal challenge in this new directorate of the Commission dealing with the FSR?

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