Commission seeks feedback on proposed Foreign Subsidies Regulation Guidelines

The European Commission has today launched a public consultation on a draft of the Guidelines on the implementation of the Foreign Subsidies Regulation ('FSR Guidelines'). Interested parties have eight weeks to comment on the Guidelines, until 12 September 2025.

This public consultation follows a Call for Evidence launched in March 2025 regarding the elements covered by the scope of the FSR Guidelines. In parallel, the Commission held targeted consultations, based on a dedicated questionnaire, with Member States and selected stakeholders representing business, legal and economic professionals, authorities, academia, legal associations and consumers.

The draft FSR Guidelines provide guidance on:

• how the Commission concludes whether there is a distortion of competition caused by a foreign subsidy, be it in the context of reviewing concentrations, reviewing foreign financial contributions in public procurement procedures, or in ex officio reviews;
• how the Commission applies the balancing test (i.e. whether positive effects counterbalance the distortive effects of the foreign subsidy);
• the Commission's power to request the prior notification of concentrations or of foreign financial contributions in public procurements, in cases below the notification thresholds.

More specifically, as regards determining whether there is a distortion of competition, it depends on the fulfilment of two cumulative conditions (Article 4(1) of the FSR). First, the foreign subsidy must be liable to improve the company in question's competitive position in the internal market. Second, the subsidy has to have an actual or potential negative effect on competition in the internal market.

The draft FSR Guidelines draw on the Commission's practice thus far, and provide more clarity on the determination of a distortion: (i) in the acquisition of other companies; (ii) through the impact of the foreign subsidy on operating decisions of the company under investigation; (iii) through the alteration of investment decisions of the company under investigation; and (iv) on activities at other levels of the value chain.

In a public procurement procedure, the Commission's assessment of a distortion focuses in particular on examining if a foreign subsidy enables a company to submit an unduly advantageous tender (Articles 4(1) and 27). It may consider the improvement of the competitive position of the company and the actual or potential negative effect of the subsidies on the public procurement procedure.

The draft FSR Guidelines provide more detailed guidance on assessing whether a tender is unduly advantageous in relation to the subject of the procurement. They also clarify how to determine whether the advantage cannot be fully justified by factors other than the foreign subsidy.

The draft FSR Guidelines also provide more predictability and transparency on how the Commission assesses the balancing test, i.e. whether the positive effects of a subsidy outweigh the negative effects of a distortion (Article 6). The draft FSR Guidelines clarify the types of positive effects (i.e. on the development of the relevant subsidised economic activity in the internal market and in relation to other relevant policy objectives), while confirming that such effects should be specific to the foreign subsidy considered. The draft FSR Guidelines explain what the possible outcomes of such balancing test may be.

Finally, the draft FSR Guidelines provide more clarity on the Commission's power to "call in" and request the prior notification of concentrations (Article 21(5)) and of foreign financial contributions in a public procurement procedure (Article 29(8)). In particular, the Guidelines address the conditions for the Commission to request call-ins and the possible elements that would be taken into account in assessing such call-ins.

The draft FSR Guidelines and further details of the public consultation are available here.

Next steps

The public consultation will be available for feedback on the Commission's website until 12 September 2025. All parties that have an interest in the matter can submit their views.

The draft FSR Guidelines will be further discussed with the Member States' FSR Advisory Committee in the last quarter of 2025 and will be published by January 2026. The Commission is also working on an FSR review report, which will be published by July 2026. This report, mandated by the FSR, will review the implementation and enforcement of the Regulation. As part of this process, the Commission intends to publish a Call for Evidence and a public consultation later this year.

Background

The Foreign Subsidies Regulation came into force on 13 July 2023. The FSR enables the Commission to address distortions caused by foreign subsidies in the internal market. It allows the EU to ensure a level playing field for all companies, while remaining open to trade and investment. Foreign subsidies can reach the internal market through participation in any economic activity and in any sector. This includes acquisitions of control, participation in public procurements and other forms of direct investments.

More information will be available on the Commission's competition website and on the Commission's "Have your say" portal.