The European Commission has released new Guidelines under the Foreign Subsidies Regulation (FSR) to improve predictability and transparency for companies operating in the EU. The Guidelines clarify how the Commission determines if a foreign subsidy distorts competition, outlines the balancing of negative and positive effects of such subsidies, and explains when prior notification is required for cases below certain thresholds.
The Guidelines specify that when a company benefiting from a foreign subsidy is identified, the Commission will assess whether there is a distortion by first checking if the subsidy strengthens its competitive position in the EU. For subsidies not directly aimed at activities within the EU, further analysis will be conducted to evaluate if they are used to support economic activities inside the bloc. The next step involves analyzing whether this support changes competitive behavior or market dynamics to the disadvantage of other businesses. The document includes examples of potentially distortive subsidies.
In public procurement situations, if an operator participating in an internal market procedure may have been affected by a foreign subsidy, the Commission will examine whether it influenced their bid. If so, it will compare this bid with others and estimates from contracting authorities to determine if it is unduly advantageous due to the subsidy or other legitimate factors.
The balancing test explained in Article 6 FSR details how negative impacts of distortive subsidies are weighed against any specific positive effects tied to them. Only benefits directly linked to the assessed subsidy are considered. If these positive outcomes outweigh negative ones, no objection is raised; otherwise, commitments or corrective measures may be imposed.
Additionally, under Articles 21(5) and 29(8) FSR, the Commission can request advance notification for concentrations and financial contributions in public procurement when there are suspicions that relevant undertakings received foreign subsidies within three years prior. Factors considered include competitive impact and strategic importance of activities involved. New exemptions have been introduced: low-value procurements, subsidies under €4 million, and those addressing extraordinary circumstances do not trigger notification requirements as long as actions occur before deals are finalized.
Before finalizing these Guidelines, stakeholder input was gathered through calls for evidence beginning March 2025 as well as targeted consultations with Member States and representatives from business sectors, academia, legal professions, and consumer groups. A draft version was open for public comment between July and September 2025.
The FSR became effective on July 13, 2023. It grants powers to address potential distortions caused by foreign subsidies across all sectors—such as acquisitions or participation in procurement—to ensure fair competition while maintaining openness to trade and investment within Europe.
Under Article 46 of FSR rules, publication of these Guidelines was required by January 13, 2026. By July 14 later that year, a report reviewing implementation must be presented to both Parliament and Council; legislative proposals could follow based on findings.
For more information about these guidelines or related procedures visit the Commission’s competition website or DG GROW’s website.