Foreign Subsidies Regulation

On 12 January 2023, the Foreign Subsidies Regulation (‘FSR’) entered into force. This new set of rules for addressing distortions caused by foreign subsidies will allow the EU to remain open to trade and investment, while ensuring a level playing field for all companies operating in the Single Market. The Regulation is published in the Official Journal.

The FSR was proposed by the Commission on 5 May 2021. Following the ordinary legislative procedure, the final text of the Regulation was adopted on 10 November 2022 by the Parliament and on 28 November 2022 by the Council.

In recent years, foreign subsidies appear to have distorted the EU’s internal market, including by providing their recipients with an unfair advantage to acquire companies or obtain public procurement contracts in the EU to the detriment of fair competition.

The FSR addresses such distortions and closes a regulatory gap, whereby subsidies granted by non-EU governments go currently unchecked, while subsidies granted by Member States are subject to close scrutiny. It proposes new tools to effectively tackle foreign subsidies that cause distortions and undermine the level playing field in the internal market.