Sales Of Goods Act Questions And Answers
Willy Aucoin
The questions and answers (Q&A) are prepared by the Commission services, and are not binding on the European Commission as an institution. The views set out below are without prejudice to the interpretation of Regulation (EU) 2022/2560 by the Union Courts. These Q&A may evolve from time to time.
The situation is different when the joint venture is created via the change from sole to joint control of a pre-existing business or subsidiary. In these cases, the joint venture may have a turnover of its own. It is only this turnover, so not including the turnover of the initial controlling shareholder, that will need to be considered for the purposes of determining whether the threshold of Article 20(3)(a) of Regulation (EU) 2022/2560 is met (the situation would be different under Regulation (EC) 139/2004 on the control of concentrations between undertakings, where, in these situations, the turnover of the joint venture would be considered as part of the turnover of the initial parent company (see paragraph 139 of the Consolidated Jurisdictional Notice)).
The same approach should be followed in the case of changes in the quality of control in a joint control structure due to the entrance of new controlling shareholders, irrespective of whether they replace existing controlling shareholders; or in the case where undertakings newly acquire joint control of a pre-existing undertaking or business (i.e. the acquiring undertakings did not exercise any control over the target prior to the acquisition).
No. All foreign financial contributions granted to the undertakings identified in Article 20(3)(b) of Regulation (EU) 2022/2560 in the three years preceding the conclusion of the agreement, the announcement of the public bid or the acquisition of a controlling interest must be taken into account to determine whether the notification threshold set out in that provision is met.
The Form FS-CO published as Annex I to the Commission Implementing Regulation describes the information that must be provided in the notification of a proposed concentration. The Form FS-CO thus modulates the amount of information required for certain foreign financial contributions. However, these foreign financial contributions are not excluded from the calculation of the notification threshold under Article 20(3)(b) of Regulation (EU) 2022/2560.
The threshold of EUR 1 million set out in the Form FS-CO refers to an individual financial contribution granted by a single third country to one of the notifying parties (or to the target in the case of foreign financial contributions to be reported under Sections 5.1 and 5.2). Therefore, to determine whether the EUR 1 million threshold is reached, foreign financial contributions granted to different parties are not to be aggregated. For instance, if third country A grants a loan of EUR 700 000 to one notifying party and another loan of EUR 500 000 to another notifying party, neither of the notifying parties will need to include information on those foreign financial contributions in the notification form. Foreign financial contributions granted by different third countries to the same party are not to be aggregated either.
Yes. Foreign financial contributions granted in the three years prior to the concentration to a company or business divested or closed in the meantime have to be taken into account for the purposes of determining whether the jurisdictional threshold of Article 20(3)(b) of Regulation (EU) 2022/2560 is met. Those foreign financial contributions are also reportable in line with the rules set out in the Form FS-CO.
According to point 3 of Table 1 in Annex I of Implementing Regulation (EU) 2023/1441, notifying parties only need to report financial contributions of EUR 1 million or more, granted by a country where the estimated aggregate amount of all financial contributions granted in the last three years is EUR 45 million or more. The threshold of EUR 45 million should be calculated per third country cumulatively for all notifying parties. For instance, if undertaking A and undertaking B are acquiring joint control over undertaking C, the EUR 45 million threshold will be exceeded if the sum of the financial contributions granted by a specific third country to undertakings A and B exceeds this amount.
Only foreign financial contributions granted in the three years prior to the conclusion of the agreement, the announcement of the public bid or the acquisition of a controlling interest need to be considered for calculating the notification thresholds of Article 20(3)(b) of Regulation (EU) 2022/2560.
The relevant moment in time to determine which financial contributions are relevant for a given notification is the date on which the financial contribution is granted, not the date on which it is received. The financial contribution should be considered granted from the moment the beneficiary obtains a legal entitlement to receive it. The relevant event is thus not the actual disbursement of the funds.
Example 1: in the case of a grant, the relevant moment in time to consider the financial contribution as granted should normally be the date of the granting act, and therefore the entire amount of the grant should be allocated to that moment, regardless of when it is actually disbursed to the beneficiary.
Example 2: in the case of a loan, the relevant moment in time to consider the financial contribution as granted is in principle determined by the signing of the loan agreement which entitles the borrower to receive the funds. In such a case, the entire amount of the loan should be granted to that moment, even if it is payable in several instalments. More generally, the relevant moment in time will depend on the conditions set out in the loan agreement. For example, for credit lines (or revolving loans) the relevant moment in time is in principle determined by the moment of signing the agreement if, according to the terms of the agreement, the beneficiary is entitled at signing to receive the liquidity envisaged under it (i.e. there are no further conditions that need to be met), the agreement includes all the relevant details (such as interest rates), the provision of the liquidity does not require additional steps from the lender, and the agreement does not provide for the possibility for the lender to deny a drawdown or change the conditions for a drawdown provided under the credit line.
Example 3: in the case of a contract for the purchase or sale of a good or service, the relevant moment in time is in principle the date on which the contract is signed, and thus the entire amount of the financial contribution should be considered as granted at that moment. However, in contracts where the exact amount to be purchased or sold (and thus the price to be paid) is not determined in the agreement, but changes over time (for example, a regular supply of a service over several years), each portion of the financial contribution should be considered as granted at the moment on which it is finally determined. In contracts where the third country purchases a good or a service, and where the right of the provider of the good/service to receive the different instalments of the remuneration is subject to conditions or to the actual delivery of the goods/services, the relevant moment in time to consider the financial contributions granted to the provider of the goods or services is the date when it is entitled to receive the remuneration (either because the goods/services are delivered or because the conditions are met).
Example 4: in the case of foreign financial contributions in the form of tax reductions, the relevant moment in time would in principle be the date when the final tax liability is determined, so that the beneficiary is entitled to pay a lower amount of tax than what would otherwise be due.
A financial contribution provided by a private entity may be attributed to a third country when, for example, the private entity is directed or entrusted by the third country to undertake a certain action.
However, as indicated in the Form FS-CO published as Annex I to the Commission Implementing Regulation (point 6(c) of the Table), the provision/purchase of goods/services (except financial services) at market terms in the ordinary course of business do not need to be reported in the notification, unless they fall into any of the categories of Article 5 of Regulation (EU) 2022/2560. However, the Commission may, based on a case-by-case assessment, require additional information on those transactions at any stage of the assessment.
However, as indicated in the Form FS-CO published as Annex I to the Commission Implementing Regulation, the following tax measures do not need to be reported in the notification, unless they fall into any of the categories of foreign subsidies most likely to distort the internal market, which are listed in Article 5 of Regulation (EU) 2022/2560: (i) deferrals of payment of taxes, tax amnesties and tax holidays as well as normal depreciation and loss-carry forward rules that are of general application, and (ii) application of tax reliefs for avoidance of double taxation in line with the provisions of bilateral or multilateral agreements for avoidance of double taxation, as well as unilateral tax reliefs for avoidance of double taxation applied under national tax legislation to the extent they follow the same logic and conditions as the provisions of bilateral or multilateral agreements. The Commission may, based on a case-by-case assessment, require additional information on those transactions at any stage of the assessment.
All foreign financial contribution granted by countries that are not EU Member States (thus including those granted by EEA EFTA countries) count for determining whether the notification threshold for concentrations set out in Article 20(3)(b) of Regulation (EU) 2022/2560 is met.
Therefore, notifying parties are in principle obliged to report these financial contributions in their notification, subject to the reporting thresholds and exceptions set out in the Form FS-CO published as Annex I of the Commission Implementing Regulation. However, during pre-notification discussions, the Commission may dispense the notifying parties, upon request, with the obligation to provide certain information which is not necessary for the examination of the case. For more information on how waivers may be granted, please see the recitals 9-11 of the Introduction to the Form FS-CO published as Annex I to the Commission Implementing Regulation.
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