EU FSR regime

At EU level, foreign subsidies are governed by Regulation (EU) 2022/2560 on foreign subsidies distorting the internal market (FSR). The FSR gives the European Commission (Commission) powers to investigate and remedy distortions in the internal market caused by financial support granted by non-EU countries to undertakings active in the EU.

The FSR fills an important gap in the EU regulatory framework. EU State aid rules control subsidies granted by Member States, but they do not apply to subsidies granted by third countries. The FSR therefore targets support from non-EU states where that support may give an undertaking an artificial advantage in EU economic activity, including in M&A transactions, public procurement procedures and other market situations.

The regime applies alongside, and does not replace, EU merger control, public procurement law, trade defence instruments, sanctions, export controls or foreign direct investment screening. The same transaction or commercial strategy may therefore require parallel analysis under several regimes, each applying different jurisdictional thresholds, legal tests, review timetables and remedies.

See further: Notification of concentrations under the FSR and Public procurement filings under the FSR.