The European Commission has released its first guidelines clarifying how it will apply the Foreign Subsidies Regulation to companies receiving support from outside the EU.
The guidelines set out how the Commission will assess whether foreign subsidies distort competition in the internal market, such as by strengthening a company’s competitive position or altering market dynamics to the disadvantage of other firms, the Commission declared in a statement on Friday.
When companies take part in public procurement — bidding to provide goods or services to public authorities — the Commission will check if foreign subsidies have made a bid unduly advantageous compared to others.
If an irregular advantage is identified, the Commission will consider whether it comes from the subsidy or other justified factors.
Rules for balancing positive and negative effects
The Commission explained that it will weigh any negative effects of a foreign subsidy against possible positive effects, considering only benefits directly linked to the subsidy under scrutiny.
If the advantages outweigh the negative impact, the subsidy will be allowed. If not, the Commission may request commitments or impose corrective measures.
The guidelines also clarify when the Commission can require companies to notify financial contributions that fall below official thresholds in the context of mergers or public procurement procedures.
New exemptions will apply for low-value procurement, subsidies below €4 million, and subsidies given in specific extraordinary circumstances.
The regulation applies to all sectors, affecting activities from company takeovers to participation in public procurement and investments.
The Foreign Subsidies Regulation entered into force on 13 July 2023 and aims to ensure fair competition for EU businesses.
The Commission consulted with member states and stakeholders, including legal professionals and consumers, before publishing the guidelines.
Under the regulation, the Commission must present a review report to the European Parliament and Council by July 2026 outlining its enforcement approach and may suggest legislative changes if necessary.
