European Commission Initiates Review Of Foreign Subsidies Regulation To Ensure Market Fairness

The European Commission has initiated its first examination of the Foreign Subsidies Regulation (FSR). This review process begins with gathering input from interested parties, with a submission deadline set for 18 November 2025. The Commission seeks to collect opinions through public consultation and a call for evidence, focusing on the FSR's implementation and enforcement aspects.

Feedback will be gathered from various stakeholders, including companies, law firms, Member States, business associations, individuals, and researchers. The public consultation aims to gather insights on specific elements of the FSR's application. Meanwhile, the call for evidence seeks broader feedback on the review report's main objectives, scope, and context.

The review report will concentrate on several key areas. These include evaluating foreign subsidies that may distort the internal market and applying a balancing test to assess if positive effects counterbalance any distortive impacts. Additionally, it will examine foreign subsidies with potential distortive effects on the internal market initiated by the Commission itself.

Other focus areas include notification thresholds and assessing the complexity of rules and costs incurred by businesses. All interested parties can submit their views on these topics via the Commission's "Have your say" portal until 18 November 2025. Feedback collected will contribute to shaping the FSR review report presented to both the European Parliament and the Council.

The Foreign Subsidy Regulation became effective on 13 July 2023. This regulation empowers the Commission to address competition distortions caused by foreign subsidies within the internal market. It ensures a level playing field for all companies while maintaining openness to trade and investment.

Foreign subsidies can enter the internal market through various economic activities across different sectors. These include acquisitions of control, participation in public procurement procedures, and other forms of direct investments. The FSR mandates that by July 2026, and every three years thereafter, the Commission must review its implementation practices.

Future Reporting Obligations

The Commission is required to present a report to both the European Parliament and Council following each review cycle. If necessary, this report may be accompanied by relevant legislative proposals. This ongoing process ensures that any necessary adjustments are made to maintain fair competition within the EU's internal market.

This structured approach allows for continuous improvement in addressing foreign subsidies' impact on competition within Europe. By involving diverse stakeholders in this process, the EU aims to refine its regulatory framework effectively.

With inputs from WAM