The latest sanctions package, adopted on 16 December 2022, constitutes the EU’s ninth round of sanctions since the beginning of Russia’s aggression against Ukraine. As in the case of previous packages, the EU has sanctioned further individuals and entities as well as introduced additional trade and sector-specific restrictions. These new measures are effective as of 17 December 2022. We highlight the most important aspects of these latest changes below.

On 28 November 2022, the Council has finally approved the regulation on foreign subsidies distorting the internal market (Foreign Subsidies Regulation – FSR). The FSR was adopted with only minor changes to the provisional agreement of the European Parliament and the Council of 11 July 2022. It will enter into force 20 days after its publication in the EU’s Official Journal, so likely still this year. Most of the new rules will be directly applicable after 6 months, but the new notification requirements for M&A transactions and public procurement procedures will apply 9 months after entry into force of the FSR, i.e. around the start of Q4 2023.

As the Russian aggression against Ukraine continues, the EU has consistently expanded its sanctions against Russia. Whereas legal action by the EU has so far been limited to the extension of individual and sector-related sanctions, plans have ripened to increase the effective implementation of these sanctions. The EU Commission has now presented a draft Directive to harmonize the definition of criminal offences and penalties for violations of the restrictive measures within the EU. In addition, the EU member states, together with the other G7 states, have agreed on an oil price cap, which is meant to reduce Russian revenues. Finally, the imposition of further restrictions is currently under discussion. It would be the ninth package of sanctions against Russia since the beginning of the war in early 2022. We have summarized these three crucial developments in EU sanctions law below.

On 23 November 2022, the Federal Cartel Office (FCO) declared that – for the time being – it does not object to the distribution of Meta VR headsets in Germany. The reason is that Meta has voluntarily refrained from linking its VR headsets to Facebook accounts. This case showcases the first application of Sec. 19a of the Act against Restraints of Competition (ARC) with the effect that a Big Tech company changed its business conduct. In the meantime, further cases are pending before the FCO with the outcome eagerly awaited.

In its May 17, 2022 ruling, the German Federal Fiscal Court (Bundesfinanzhof, BFH) confirmed that it is irrelevant to determine the customs value for imported goods if the transaction value is adjusted subsequently (Case No. VII R 2/19). The ruling marks the end of the Hamamatsu case, in which the European Court of Justice (ECJ) already had taken a position (Judgment of 20 December 2017, C-529/16). The core of the proceedings hinges on whether transfer pricing adjustments in cross-border transactions between affiliated companies are to be taken into account retrospectively when determining the customs value.

On the 26th of October, the German Federal Government published the draft text of the Second Sanctions Enforcement Act (Sanktionsdurchsetzungsgesetz II – SDG II), which is set to pass by the end of this year. The proposal is the second part of the previously planned two-part legislative package and builds on the First Sanctions Enforcement Act (Sanktionsdurchsetzungsgesetz I – SanktDG I), which came into force in the end of May earlier this year.

On 1 January 2023, the “Act on Corporate Due Diligence Obligations in Supply Chains” (the “Act”) will enter into force for companies with more than 3000 employees in Germany. In order to specify the obligations under the Act, the Federal Office for Economic Affairs and Export Control (“BAFA”) published several guidance documents, most recently one on the complaints procedure (in German) under Sec. 8 and 9 of the Act. In this briefing, we summarize the main specifications and recommendations provided in the guidance document.

As of January 1, 2023, companies that fall under the scope of the German Supply Chain Due Diligence Act (LkSG) will be subject to a reporting obligation. To facilitate the timely and complete implementation of this obligation, BAFA has now published a catalogue of questions that provides a detailed insight into the structure and content of the reporting expected by the authorities. In the following, we briefly outline the most important components and added values of this questionnaire.

On the night after Halloween, the long-awaited Digital Market Act (DMA) has entered into force. Should companies be frightened or euphoric about the new EU rules for digital gatekeepers? Although field testing is still some months away – the DMA will only start applying after a further six months, on 2 May 2023 – affected companies are well advised to already familiarize themselves with the mechanics of the DMA. Our briefing outlines how the DMA will work.

In the 2022 State of the Union the President of the European Commission, President von der Leyen, stressed the economic importance and high supply risk of critical raw materials (CRMs), such as lithium, magnesium, rare earths, and others. In this context, she announced the implementation of the CRM Act, of which the feedback and public consultation period is currently ongoing until 25 November 2022. The topic of CRMs and the EU’s dependency on non-member states for supply is not novel but gained traction in light of the invasion of Ukraine by Russia and the EU’s reliance on Russian gas and oil. At the same time, China is by far the biggest supplier of CRMs to the EU, and China had used its supply of CRMs as a geopolitical response. In possible future conflicts with China, it can be assumed that China will again use CRM supply geopolitically. The CRM Act is the latest example of the EU’s intention to push towards a digital and sustainable future, the “Twin Transition”, as well as strengthen EU resilience and security. It exemplifies the EU institutions’ unanimous effort to reduce strategic dependencies to ensure the “Twin Transition” of the EU economy.