Analysis of the EU Foreign Subsidies Regulation

This report examines the EU's Foreign Subsidies Regulation (FSR), enacted in 2023, and its implications for European companies, particularly those operating in China. The FSR aims to create a level playing field by addressing the competitive advantages gained by non-EU companies through foreign subsidies. The document outlines the enforcement mechanisms of the FSR, including the ex officio procedure, which allows the European Commission (EC) to investigate companies suspected of distorting competition through foreign subsidies. It also details the mergers and acquisitions (M&A) filing regime and public procurement filing regime established by the FSR, highlighting the thresholds that trigger compliance obligations. The report indicates that EU companies have expressed concerns regarding the increased compliance burden imposed by these regulations, particularly in relation to M&A deals and public procurement processes. The FSR's early enforcement phase suggests that EU companies may disproportionately bear the compliance costs, raising questions about its effectiveness in achieving its intended objectives.