On Friday 20 February, the European Commission published the responses received to its public consultation on the Foreign Subsidies Regulation (FSR) (2022/2560), which came into force on 13 July 2023.
This regulation enables the European Commission to combat distortions of the internal market caused by foreign subsidies and requires it to publish a report on the implementation of, and compliance with, the regulation by 14 July 2026 at the latest.
On 9 January, the European Commission also published guidelines relating to this regulation to clarify a number of concepts, including the way in which the Commission determines whether a foreign subsidy distorts competition, the balancing of the distortive effects against any positive effects of the subsidy, and the European Commission’s power to require prior notification for cases below the notification threshold (see EUROPE 13783/2).
The consultation ran from August to November 2025 and involved 54 participants representing companies, professional associations, public authorities and higher education establishments from the EU and beyond.
The contributions received “generally acknowledge the importance and relevance of the FSR for the integrity and proper functioning of the EU’s internal market. Respondents were also positive about the potential of enforcement tools to ensure a level playing field in the EU’s internal market”, said a press release.
However, there were also suggestions for improvement, such as the notification and reporting obligations in the modules on concentration and public procurement, and the need for better clarity for concepts such as ‘foreign financial contributions’.
On the determination of distortion, 28 of the 54 respondents consider, for example, that the framework for assessing distortions under Article 4 of the FSR was not sufficiently clear and predictable.
The ‘balancing test’ under the Financial Subsidies Regulation also lacks transparency and proportionality. They also believe that the European Commission has been given a considerable margin of discretion in applying the test.
In addition, duplication and overlap, involving situations where the same merger is subject to notification obligations under the FSR and merger control and/or foreign direct investment screening, “generates additional administrative burden”.
Link to responses: https://aeur.eu/f/ku3 (Original version in French by Solenn Paulic)