For many years, the European Union enforced strict rules on subsidies from its Member States but lacked a comparable tool to address financial support from non-EU countries to companies operating in the internal market. This created a clear regulatory gap. While European companies receiving State support faced detailed scrutiny, competitors backed by non-EU governments could acquire European firms, participate in major tenders, or expand in the internal market without similar oversight. The Foreign Subsidies Regulation was introduced to address this imbalance. Nearly three years after implementation, the European Commission’s first review finds the Regulation effective and a key part of the EU’s competition framework.
The Regulation was necessary. The first years of its application also show that it is relevant in practice.
The EU FSR Review: A Massive Wave of Notifications
Between October 2023 and May 2026, the Commission received 273 notifications regarding concentrations, nearly three times as many as expected. In the same period, it received 5,150 submissions related to 863 public procurement procedures. These figures show that foreign financial contributions are significant and form part of the commercial and financial environment for many companies operating in Europe.
However, they also highlight the main weakness of the current system.
The Foreign Subsidies Compliance Burden: High Volume, Low Enforcement
Approximately 97% of notified concentrations were cleared at the preliminary stage, with only three advancing to in-depth investigation. The challenge is not a lack of information, but rather identifying which financial contributions provide a genuine competitive advantage.
Not every transfer of resources from a public authority is a subsidy, and not every subsidy distorts competition. A system that requires extensive reporting but does not distinguish between high-risk and routine cases risks imposing significant compliance costs without proportional enforcement benefits.
Public Procurement Challenges under the FSR
The same issue exists in public procurement. While some bidders withdraw after in-depth investigations, showing the Regulation’s deterrent effect, the high volume of submissions, repeated filings, and short deadlines indicate the procedure remains challenging for both companies and contracting authorities.
The Solution: Raising FSR Notification Thresholds for Smarter Control
The Commission is right to consider higher notification thresholds, simplified procedures, clearer exemptions, and broader use of waivers. The goal should be to make the Regulation more selective, not weaker.
The Foreign Subsidies Regulation should focus on cases where public support may significantly influence an acquisition, affect tender outcomes, or strengthen a company’s market position. Strategic sectors, infrastructure, energy, advanced technology, and large public contracts are areas where careful scrutiny is essential.
The Regulation’s success will not be measured by the volume of reports or notifications but by the Commission’s ability to identify and address subsidies that truly distort competition. The first review confirms the Foreign Subsidies Regulation is here to stay. The next step is to ensure it becomes more proportionate, predictable, and economically focused. Europe needs better-targeted control over foreign subsidies, not less control.
