Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market (FSR) entered into force on 12 January 2023 and will start to apply as of 12 July 2023.

The FSR creates a brand new instrument to fill a regulatory gap, by preventing foreign subsidies from distorting the European Union (EU) internal market. Whereas companies receiving public support in the EU are subject to strict State aid rules, companies obtaining public support outside the EU are generally not. This was perceived as putting companies in the EU at a disadvantage compared to companies that obtained subsidies outside the EU, but that also engaged in economic activity in the Union.

The FSR’s scope extends far beyond the obvious State support, to cover common types of benefits that are granted all over the world, including in countries driven by a market economy. Its obligations will inevitably place an additional administrative burden on companies engaging in an economic activity in the EU. Acceptance of a foreign subsidy distorting the EU internal market may have far-reaching consequences for the company. The FSR places additional compliance obligations on companies, and for many will entail a thorough assessment to identify and justify foreign subsidies received. For companies considering transactions in the EU, the FSR effectively creates a third layer of deal conditionality, besides merger control and Foreign Direct Investment laws. This is adding a further unique set of thresholds, timings and factual considerations, to be included in companies’ strategies to invest in the EU. This will require expertise in EU antitrust and State aid law, and a good understanding of the details of the FSR.

Key things you need to know:

Continue Reading The EU Foreign Subsidies Regulation enters into force

On 19 October 2022, the European Commission (the “Commission”) adopted its new State aid Framework for research, development and innovation (the “2022 RDI aid Framework”). This instrument governs Member States’ investment in RDI activities. It is an important response to the 2020 Commission Communication on a new European Research Area for Research and Innovation (the “ERA Communication”), aiming at strengthening investments and reaching a 3% GDP investment target in the field of RDI. The 2022 RDI aid Framework is a revision of the previous version of 2014.

The three most important things you need to know about the 2022 RDI aid Framework are:

  • The Commission’s approval is subject to a set of criteria to determine whether the aid is justified and can be authorised, and compliance with recent EU objectives such as the EU Green Deal and the EU Industrial and Digital Strategies will have a positive influence on the Commission’s assessment;
  • RDI activities now explicitly include digitalisation and digital technologies; and
  • Member States can grant aid for testing and experimentation infrastructures which predominantly provide services to undertakings for R&D activities closer to the market.

Background

Similarly to its previous version, the 2022 RDI aid Framework recalls the instances where RDI aid does not qualify as a State aid and is therefore not caught by the State aid rules. This would be the case where the aid is granted to non-economic activities conducted by universities or where universities, although publicly funded, engage in RDI activities with companies pursuing commercial goals.

Continue Reading The Commission has revised its framework for State aid for research and development and innovation

Yesterday, the FCC announced that on November 18, 2022, it will release a “pre-production draft” of its widely anticipated broadband maps, which will contain granular information about existing broadband infrastructure and service availability in the U.S. The maps, which the FCC was required by law to develop, will be used by the Department of Commerce’s National Telecommunications and Information Administration (“NTIA”) to distribute $42.5 billion in funding to states for allocation to service providers who will use it to construct additional broadband networks.

The federal government’s allocation of these funds is pursuant to the Broadband Equity, Access, and Deployment (“BEAD”) Program, which was established by the Infrastructure Investment and Jobs Act (“IIJA”) in November 2021. Click here for our summary of the BEAD Program.

The FCC began this particular mapping initiative in August 2019. Doing so marked a departure from the agency’s prior mapping efforts, which had acknowledged gaps. The new initiative was informed in part by the March 2020 Broadband DATA Act, which required the FCC to collect granular data about geographic areas in which broadband infrastructure exists, as well as attributes such as download and upload speeds and latency. 

To ensure accuracy and avoid over- or under-funding certain locations, the FCC incorporated a “challenge process” into its broadband map development, through which governmental entities, broadband service providers, and others are able to submit bulk challenges to the data that the FCC collected. The FCC believes that this process will help it refine its maps before subsequent versions are released.

Continue Reading FCC to Release Broadband Maps on November 18: Will Determine How $42.5 Billion in Funding Will be Allocated by NTIA in 2023

On Monday, the Supreme Court granted certiorari in Gonzalez v. Google LLC, 2 F.4th 871 (9th Cir. 2021) on the following question presented:  “Does section 230(c)(1) immunize interactive computer services when they make targeted recommendations of information provided by another information content provider, or only limit the liability of interactive computer services when they

By Terrell McSweenyMegan CrowleyNicholas XenakisAlexandra Cooper-Ponte & Madeline Salinas on September 28, 2022

On September 16, the Fifth Circuit issued its decision in NetChoice L.L.C. v. Paxton, upholding Texas HB 20, a law that limits the ability of large social media platforms to moderate content and imposes various disclosure

The U.S. Securities and Exchange Commission (“SEC”) last week announced settlements with four investment advisory firms regarding alleged violations of the SEC’s pay-to-play rule, illustrating that federal regulators continue to aggressively pursue such cases.   The rule at issue, Rule 206(4)-5 (“the Rule”), prohibits investment advisors from, among other things, receiving compensation from certain government entities for two years after a person affiliated with the investment advisor makes a covered campaign contribution to an official of the government entity.  While the involved firms did not admit or deny the allegations in the settlement orders, an examination of the cases is instructive in assessing the current landscape of SEC pay-to-play rule enforcement.  Together, the four settlements are noteworthy in two major respects: (1) the circumstances of the underlying contributions that highlight the wide-reaching application of Rule 206(4)-5; and (2) the fact that one of the SEC Commissioners issued a sharp dissent that expressed deep concern about the breadth of the Rule.

The settlements involved covered associates at four different firms making contributions to four different recipients: an unsuccessful candidate for Mayor of New York City; the incumbent Governor of Hawaii ; an unsuccessful candidate for Governor of Massachusetts; and to a then-candidate for Governor of California.  In two cases, the firms managed public pension money and, in the other two, the firms managed state university endowments, an often overlooked category of government entity investors. 

While the SEC Rule is intended to prevent fraud, it seems highly unlikely that any of the contributions at issue in these four cases could have influenced state investment decisions: 

  • All four investment advisory firms had preexisting business relationships with the relevant government entities before the prohibited contributions were made and no new business was solicited after the contributions. 
  • One of the donors was not even a covered associate at the time of the contribution.
  • Only one of the four prohibited recipients was an incumbent officeholder at the time of the contribution. 
  • Two of the four recipients failed to win election to the offices they sought. 
  • Two of the cases involved situations where the donor either received a refund or requested a refund. 
  • The contribution amounts were a drop in the bucket in proportion to the tens of millions of dollars raised in these elections – three cases involved a single $1,000 contribution and the fourth involved a contribution of $1,000 and another $400. 


Continue Reading SEC Commissioner Says It’s “Past Time” To Reform Overly “Blunt” Pay-to-Play Rule

This half-yearly update on insurance coverage litigation summarises significant insurance coverage cases in the English courts and provides a detailed analysis of the Corbin & King v AXA Insurance UK Plc case, highlighting the key takeaways for policyholders. In the first half of 2022, the English courts have delivered important judgments on a number of critical issues for policyholders, including Covid-19 business interruption insurance, aggregation clauses, insurers’ implied obligation to pay claims within a “reasonable” time, and the effect of lenders’ mortgagee interest insurance policies; some of which are policyholder friendly, some less so.  

Significant cases 2022 H1

Corbin & King v AXA Insurance UK Plc [2022] EWHC 409 (Comm): In the most anticipated decision of the last half-year relating to Covid-19 business interruption losses, the English High Court determined in favour of a restaurant business, that a prevention of access clause in its policy was triggered by the Government-mandated lockdowns arising from Covid-19 in 2020 and 2021. Given the importance of this case for policyholders, we analyse the court’s findings in further detail below.

Spire Healthcare Limited v Royal & Sun Alliance Insurance Limited [2022] EWCA Civ 17: This decision is the latest word on the interpretation of “aggregation clauses” in insurance policies that require a policyholder to aggregate similar or related losses into a single claim against the insurer, which is then subject to a liability cap on each claim. The Court of Appeal held that several claims against the policyholder could be aggregated into one claim against the insurer on the basis that there was “one source or original cause” of the policyholder’s loss. As a result, the policyholder’s recovery was limited to £10 million, the policy limit per claim.

Continue Reading Half Year Review: Insurance Coverage Litigation (H1 2022)

Never in our decades of working on and around Capitol Hill and the White House have we seen as much anti-business sentiment among Republican lawmakers as we do today. And the trend shows no sign of abating.

There was a time when American corporations could count on unequivocal Republican support. To  be a Republican was virtually synonymous with supporting free market principles, capitalism and business. Republican President Calvin Coolidge once said, “the chief business of the American people is business.” Today, however, many Republicans scoff when they’re told that big business’ trade associations are for x or against y. They believe many companies have abandoned their trust in market forces for a “crony capitalism” that protects favored industries. Industries that profit from government programs are viewed with particular suspicion.

Conservatives say that it is not they who have moved away from business, but rather business which has moved away from them. Many Republicans see corporate America as lining up with the Progressive agenda on climate, ESG, mandatory vaccinations, sexual orientation and gender issues, voter ID laws, gun rights, speech restrictions, policing and abortion, leading them to believe that Wall Street is adverse not just to traditional values but also to conservative economic and constitutional principles. Social media companies have gained special opprobrium from Republicans for their content moderation policies, which they believe favor Progressives and suppress conservative content.

Continue Reading Republicans Are Moving Away from Big Business

On July 14, 2022, the U.S. Department of Commerce (“Commerce”) issued a request for a range of additional factual information in connection with the agency’s ongoing circumvention inquiries into solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam that employ inputs from mainland China.[1]  The deadline to respond is July 21st.

In the July 14 memorandum, Commerce seeks information about the:  (1) amount of investment necessary to construct and start-up certain facilities, (2) non-financial barriers (e.g., access to inputs, qualified technical employees, technologies, research and development, etc.) that companies typically face to establish and begin certain operations, and (3) research and development (“R&D”) expenses associated with conducting certain operations.  These types of facilities/operations involved in:

  • refining silicon into solar-grade polysilicon,
  • producing ingots from solar-grade polysilicon,
  • producing wafers from solar-grade ingots,
  • producing solar cells from wafers,
  • producing solar modules from solar cells, and
  • the same operations and products as foreign producers and exporters responding to Commerce’s solar circumvention inquiries. 


Continue Reading Commerce Requests Factual Information in Solar Circumvention Inquiries on Level of Investment, Non-Financial Barriers, and Research and Development Expenses