Agreeing conditions precedent and deal timelines has always been a challenge for companies. From an EU perspective, companies previously only had to consider whether a deal led to an EU or Member State merger control filing obligation. However, there are now three new layers of complexity for companies to consider in the EU:

1. Article 22 and ex-post assessments: a new approach to the EU’s merger control referral mechanism together with the ex-post review of transactions has added complexity to consider when entering into a new deal.
2. Foreign Direct Investment (FDI): 23 EU Member States now have a an FDI regime which if the filing thresholds are met gives rise to a notification requirement and clearance prior to closing. Sweden is the most recent EU Member State to adopt an FDI regime, which came into force on 1 December 2023.
3. Foreign Subsidies Regulation: as of 12 July 2023, transactions in the EU may also be subject to a further pre-closing review of broadly defined financial contributions from non-EU Member States.

On 13 July 2023, in Case C-106/22, the European Court of Justice delivered its decision in relation to a preliminary reference submitted by the Budapest High Court. In the context of companies that often have a cross-border ownership structure extending outside of the EU, the ECJ concluded that the fact that a parent company registered in a third country has a majority control over an EU-based investor does not mean that the EU FDI Screening Regulation applies.