A new risk is emerging for dealmakers planning transactions in Europe: local regulators applying the Foreign Subsidies Regulation (FSR) more vigorously than expected.

The FSR, which regulates whether companies that have received government subsidies have gained an unfair advantage when buying European targets, has been on the statute book since 2003.

The European Commission (EC) and the European Court of Justice (ECJ) can also use the new powers “ex oficio,” by calling in deals that are below the notification thresholds. Both institutions considered exercising this right for China-based Midea’s takeover of Arbonia’s climate division.

Natalie McNelis, Mergermarket’s new Brussels bureau chief, joins Dealcast host Julie-Anna Needham to discuss why the potential scrutiny of this transaction was “surprising” and how unexpected FSR reviews could throw deal timetables into disarray.

• Why are dealmakers in Europe nervous that Teresa Ribera, the new competition commissioner, might adopt a harder line than her predecessor, Margrethe Vestager?
• Why will Safran’s proposal to offer Phase I remedies in its takeover of Collins Aerospace’s actuation and flight control business be an interesting test case?
• What can we expect to see in European scrutiny of Mars’ takeover of Kellanova and Prosus’ acquisition of Just Eat Takeaway?

All this and more in this week’s Dealcast.