The regulation in a nutshell
On 12 July 2023, the Foreign Subsidies Regulation (‘FSR’) started to apply. This new set of rules enables the Commission to investigate financial contributions granted by non-EU governments to companies operating in the EU. The FSR aims to ensure a level playing field for all companies operating in the single market, while keeping the EU open to trade and investment.
In recent years, foreign subsidies appear to have distorted the EU’s internal market, by providing their recipients with an unfair advantage to acquire companies or obtain public procurement contracts. Prior to the FSR, subsidies granted by EU countries were subject to close scrutiny under EU state aid rules, while subsidies granted by non-EU governments were unchecked.
The FSR addresses this regulatory gap by enabling the Commission to assess and remedy distortions caused by foreign subsidies. If such subsidies are found to be distortive, the Commission can impose corrective measures to level the playing field.
The FSR establishes 3 investigative procedures.
- Public Procurement Investigations
- Applies to bids in public procurement procedures where non-EU financial contributions are involved and the estimated contract value is at least €250 million.
- If the procurement is divided into lots, FSR obligations apply when the net estimated value exceeds €250 million, and the value of an individual lot or the total of all lots applied for is at least €125 million.
- This procedure is managed by the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW).
- Concentrations reviews (notification-based procedure)
- Applies to mergers and acquisitions (concentrations) where
- the acquired company, one of the merging parties, or the joint venture generates at least €500 million in EU turnover, and
- the involved parties received foreign financial contributions exceeding €50 million in the past 3 years.
- This procedure is managed by the Directorate-General for Competition (DG COMP).
- Applies to mergers and acquisitions (concentrations) where
- Ex officio market investigations
- Allows the Commission to launch investigations on its own initiative into all other market situations where foreign subsidies may cause distortions.
Who is responsible?
DG GROW is responsible for enforcing the Foreign Subsidies Regulation in foreign financial contributions to public procurement procedures.
DG COMP is responsible for enforcing the Foreign Subsidies Regulation in foreign financial contributions to concentrations.
The procedures conducted by DG COMP and DG GROW are distinct, therefore please make sure to address submissions to the relevant Directorate-General of the Commission.
Contact us
For questions on public procurement procedures, emails can be sent to: grow-fsr-pp-notifications@ec.europa.eu