The EU Commission publishes Guidelines on the Foreign Subsidies Regulation
The EU Commission has published its long-awaited Guidelines on the application of the EU Foreign Subsidies Regulation (“FSR Guidelines”), marking a significant step in the consolidation of the EU’s new framework to address distortions caused by foreign subsidies in the EU internal market. The FSR Guidelines, which the EU Commission was required to adopt by 13 January 2026, aim to enhance legal certainty, transparency and predictability for companies active in the EU.
They follow extensive consultations with Member States and stakeholders. In particular, the EU Commission published draft FSR Guidelines on 18 July 2025 and launched a public call for feedback, reflecting the importance and sensitivity of the new regime.
The final FSR Guidelines now provide detailed insight into how the Commission intends to enforce the FSR in practice.
Assessment of distortions under Articles 4(1) and 27 FSR
The FSR Guidelines confirm that a foreign subsidy is distortive where it is liable to improve the competitive position of an undertaking in the internal market and, as a result, actually or potentially negatively affects competition. The EU Commission will apply a structured analysis, distinguishing between targeted and non-targeted foreign subsidies, and paying particular attention to the risk of cross-subsidisation of EU activities.
In the context of public procurement, the FSR Guidelines clarify that the EU Commission’s assessment will focus on whether a foreign subsidy enabled an economic operator to submit an unduly advantageous tender. This involves examining how the bid was designed, whether it is unduly favourable compared to competing offers or the contracting authority’s estimates, and whether the advantage can be attributed, to an appreciable extent, to the foreign subsidy rather than to legitimate efficiency or commercial factors.
Clarification of the balancing test under Article 6 FSR
The FSR Guidelines provide detailed guidance on the balancing of negative and positive effects of a foreign subsidy. Only positive effects that are specific to the subsidy under assessment will be taken into account, including effects linked to the development of the subsidised activity or to broader EU policy objectives. The EU Commission will assess whether such positive effects could be achieved without the distortion and will decide whether to clear the subsidy, accept commitments, or impose redressive measures.
Call-in powers for concentrations and public procurement
The FSR Guidelines clarify the conditions under which the EU Commission may request the prior notification of non-notifiable concentrations or public procurement procedures under Articles 21(5) and 29(8) FSR. The EU Commission will assess, inter alia, the impact in the Union, the strategic nature of the activity, and the likelihood of a distortion, while also recognising specific safe harbours, notably for low-value procurement procedures and limited foreign subsidies.
Enforcement context and recent cases
The publication of the FSR Guidelines comes shortly after a number of high-profile enforcement actions that illustrate the Commission’s increasingly assertive use of the FSR.
In December 2025, the EU Commission announced the opening of an in-depth ex officio investigation into Nuctech’s activities in the threat detection systems sector. The investigation, initiated following inspections carried out in April 2024, focuses on alleged foreign subsidies granted by the People’s Republic of China, including grants, preferential tax measures and preferential financing. The EU Commission raised preliminary concerns that these measures may have enabled Nuctech to offer prices and conditions in public tenders that could not be reasonably matched by competitors, thereby distorting competition in the internal market.
Earlier, in November 2025, the EU Commission conditionally approved the acquisition of Covestro by ADNOC under the FSR, subject to compliance with binding commitments. The EU Commission found that foreign subsidies granted by the UAE (including an unlimited State guarantee, a committed capital increase and advantageous tax measures) were liable to distort competition both in the acquisition process and in the post-transaction activities of the merged entity.
Conclusion
Taken together, the FSR Guidelines and the EU Commission’s recent decisional practice confirm that the FSR has entered a fully operational and enforcement-driven phase. Foreign companies involved in acquisitions, public procurement or other economic activities in the EU must now carefully assess their exposure to foreign financial contributions and anticipate enhanced scrutiny. Moreover, EU companies may pay great attention to the nature and origin of the capitalization of their foreign competitors.
For further information, please contact :
Bruno Lebrun - Partner - b.lebrun@janson.be
Wafa Lachguer – Associate - w.lachguer@janson.be