EU Foreign Subsidies Regulation: European Commission Launches Consultation on Guidelines
The European Commission seeks stakeholders' views on the guidelines for the application of the Foreign Subsidies Regulation ("FSR").
Key Aspects of the Substantive Assessment Under the FSR
The substantive FSR review essentially follows a three-step test: (i) assessing whether a foreign subsidy distorts the EU market; (ii) weighing the foreign subsidy's negative effects against its positive impacts ("balancing test"); and (iii) imposing remedies if necessary. (See our July 2022 Commentary, EU Readies New Regulation of Foreign Subsidies That "Distort the EU Market"; our December 2022 Alert, EU Foreign Subsidies Regulation Filings Mandatory Starting in October 2023; and our July 2023 Commentary, EU Adopts Reporting Requirements for Transactions and Public Bids Under the Foreign Subsidies Regulation, for more details).
Despite experience from cases handled so far and initial clarifications by the Commission, important interpretative and operational questions remain open (see our August 2024 Commentary, The EC Issues Guidance on Assessing Market Distortions Under the Foreign Subsidies Regulation). The guidelines, due by January 12, 2026, aim to provide greater legal certainty and predictability to companies.
Implications for Companies
The consultation presents an opportunity for companies to shape the future FSR enforcement, which will affect their economic activities in the EU, including M&A and participation in public tenders.
Notably, the Commission intends to increase the number of ex officio reviews, scrutinizing transactions and tenders below the notification thresholds. Companies receiving subsidies from non-EU states—especially those operating in sectors with significant state involvement or national security implications—could face heightened regulatory scrutiny and potentially also remedies under the FSR.
The Commission's enforcement priorities and practice, and the internal risk assessment by companies, will be largely shaped by the future guidelines, and this the first opportunity for companies to provide relevant input.
The deadline for submitting feedback on the Commission's "Call for Evidence" portal is April 2, 2025. The Commission welcomes any kind of feedback. In parallel, the Commission has sent targeted questionnaires to Member States and stakeholders such as law firms and consumer associations. Draft guidelines will be published for further consultation before final adoption by January 12, 2026, with an earlier release possible.
