Dechert Brussels managing partner on why deal advice now starts earlier

The centre of gravity of our transactional practice has shifted considerably. When I started in Brussels, the core of the transactional work was classic merger control – for example, filing notifications, managing Phase I timelines, occasionally fighting through a Phase II.

While that remains important, merger control now sits within a much larger matrix of regulatory touchpoints that clients need to navigate simultaneously.

The Foreign Subsidies Regulation (FSR) has been the single most transformative addition to that matrix. Since it became fully applicable in mid-2023, it has generated filings at a rate that vastly exceeded what anyone at the European Commission or in the private bar initially expected – more than 200 notified transactions as of beginning of 2026, against an initial forecast of perhaps 30 a year.

At the same time, the Foreign Direct Investment (FDI) screening landscape has shifted fundamentally. A new EU FDI Screening Regulation was formally adopted in June 2026, replacing the 2019 framework. It mandates screening across all Member States and strengthens the Commission's coordination role. And then there is the proposed Industrial Accelerator Act, published by the Commission in March 2026, which would layer a further mandatory pre-approval regime on top for certain foreign investments in strategic sectors where a third country holds more than 40% of global manufacturing capacity. In practice, that is currently a China-specific regime in all but name, though the drafting is country-neutral.

I now spend a lot of time advising clients on which of several parallel regulatory tracks a deal sits on, how those tracks interact procedurally, and what the combined timeline and risk profile looks like.

That is a different kind of transaction-related legal service from what Brussels competition counsel provided a decade ago.

The defining questions clients bring to us are how long it will take to get a deal cleared, and whether a deal will require remedies or risks being blocked.

That question existed in the pre-FSR and expanded FDI world too, but there it was typically answerable with reasonable confidence. The Commission's EU Merger Regulation decisional practice is extensive and public.

Experienced counsel could identify the relevant precedent, form a calibrated view on intervention risk early in the process, and let that view inform deal structure, share purchase agreement terms, and bid strategy.

FSR practice, in particular, has been materially harder to read: the Commission does not publish Phase I decisions. In the absence of a developed body of public decisional practice, practitioners were left to navigate the substantive test by reference to EU State aid principles (which the FSR draws on structurally) supplemented by whatever signals could be gleaned from the few cases that proceeded to Phase II and were cleared with behavioural commitments. That is a thin basis from which to advise on intervention risk.

The guidelines published in January 2026 are a welcome step. They set out the Commission's analytical framework for assessing distortion and applying the balancing test, and clarify to a degree the conditions for exercising the call-in power. But much remains desired. The Guidelines resist providing a safe harbour. The distortion test remains general, the call-in criteria are deliberately non-exhaustive, and the Commission has preserved very wide discretion. The Guidelines signal clearly that flexibility is intentional.

At the same time, our Dechert FSR Radar report shows that the Commission intervenes in around 1% of transactions. Of more than 230 M&A notifications received through to early 2026, very few proceeded to Phase II, and none resulted in prohibition. The conclusion is clear: for the vast majority of clients, FSR does not pose a prohibition risk. Instead, it poses a timing risk.

First, in competitive auctions. Where a seller is running a dual-track or tightly timetabled process, a bidder who cannot give a credible date for regulatory clearance is at a real disadvantage against one who can. An investor who has prepared will be in a more advantageous position on both the expected filing and approval dates and the substantive risk profile. In a process where sellers evaluate bids on execution certainty as much as on price, that preparedness carries real weight.

Second, in SPA negotiations, the FSR has added a new layer of tension around long-stop dates and termination rights. Sellers have become far more sophisticated about FSR risk allocation and for example pushing for reverse break fees linked to regulatory failure.

Third, and less visible, is the operational disruption caused by an ad-hoc data-gathering itself. Large portfolio companies and corporate groups may need to mobilise large teams of employees across finance, procurement, tax, and legal functions simply to compile data for the FSR notification. That creates a bandwidth problem for investors in the middle of a competitive process and a senior management distraction at a critical stage, carrying real operational consequences.

A great deal. The single most valuable thing we now do for clients is what I would call FSR readiness work. Well before any transaction is on the table, we help clients build and maintain a rolling inventory of foreign financial contributions received by the group over the preceding three years. This should not be signing-stage work; it should be continuous, built into the group's internal compliance cycle.

When we walk into a pre-notification meeting with a well-organised, pre-verified Foreign Financial Contribution (FFC) schedule rather than scrambling to produce one under time pressure, this decreases the pre-notification phase.

For PE sponsors, the fund-by-fund exemption (which scopes the notification to the acquiring fund rather than the GP's entire fund portfolio) is a significant procedural lever, but it needs to be claimed and structured properly from the outset.

Limited Partner (LP) analysis, governance rights mapping, and identification of any state-linked LP capital all need to happen outside a transaction, so that the exemption argument is clean and well documented. Done post-signing under time pressure, it is invariably done less well.

We also push clients to think about their investment committee materials and valuation models with FSR in mind from the outset.

These three categories are adapting in distinct ways, and the pace of adaptation is accelerating as the Commission's enforcement record builds.

For PE sponsors, FSR has been a particularly significant burden. Based on the Dechert FSR Radar report, sponsors account for roughly a third of all FSR notifications received during the relevant period, the largest single category of notifying parties. Larger sponsors are investing in centralised FFC-tracking infrastructure.  Sponsors with sovereign wealth fund LPs are taking a much closer look at those relationships. And some sponsors are now factoring FSR directly into target selection, particularly in sectors the Commission has signalled are more likely to attract call-in attention such as strategic infrastructure, advanced manufacturing, energy, and digital assets.

Strategic corporate buyers face a different problem. For a large multinational operating across multiple non-EU jurisdictions, the three-year FFC history can be complex, potentially including government contracts, export credit support, tax incentives, and regulatory approvals with economic value. Coordinating data collection and verification across many business units can be very challenging.

State-linked investors are in the most exposed position. These investors need to plan for longer timelines, deeper disclosure, and the possibility of Phase II. This may lead some to reduce the visibility of their involvement in deal structures – through minority participation, co-investment alongside a private lead, or similar mechanisms.

Substantially – and I think this reflects a broader evolution in what Brussels-based antitrust counsel actually does.

FSR matters often demand multi-disciplinarity. A serious FSR notification requires competition lawyers who understand the distortion and balancing analysis, corporate lawyers who understand the SPA implications and FFC disclosure obligations, and sometimes sector specialists who can speak to the commercial and regulatory dynamics of the industry involved.

My principal priority is ensuring we can genuinely deliver the seamlessly integrated service clients now need.

The regulatory landscape facing any cross-border buyer in Europe in 2026 spans merger control (itself more demanding as the substantive analysis has become more complex), FSR, FDI screening, the proposed Industrial Accelerator Act regime in strategic sectors, and any applicable sector-specific framework, whether energy, financial services, or pharmaceuticals. Advising a client competently across all of that simultaneously, during a competitive deal process, requires depth in each discipline and coordination between them.

I am also focused on deepening our industrial coverage in the sectors where regulatory exposure is highest and client demand is most acute. Advising well in such sectors requires lawyers who understand the market's commercial dynamics, the policy context behind the relevant regulatory decisions, and possess the full legal toolkit to navigate them. We have been building that depth, and it will remain a priority.

From a Brussels office perspective, I am also thinking about how we position ourselves within Dechert's global network. The US-EU intersection is where the most interesting and commercially significant work will concentrate. That transatlantic coordination is something we are investing heavily in.

I think it does. The most valuable thing we do with regular clients is support them in building and maintaining a rolling inventory of foreign financial contributions on an ongoing basis. This requires counsel to work directly alongside deal teams, finance functions, treasury, tax, procurement, and compliance teams across multiple jurisdictions, coordinating the collection, verification, and organisation of a very large volume of information.

That is where counsel’s depth of knowledge and experience becomes critical. The firms that will be most valuable to clients in this environment are those that can operate as partners to the client's internal teams well before a deal is on the table.