In July 2025, the European Commission published draft guidelines on the application of certain provisions of the Foreign Subsidies Regulation (FSR). In force since January 2023, the FSR aims to fill a perceived regulatory gap by allowing the Commission to scrutinise financial contributions granted by non-EU countries to firms active in the EU’s Single Market.
In response to the public consultation, RBB submitted a reply setting out a number of observations. Our main concerns and recommendations are summarised below:
An important initial step in the Commission’s assessment is determining when a foreign financial contribution amounts to a foreign subsidy. While this is not mandated by the FSR, the revised Guidelines should set out the Commission’s approach in this regard, providing specific examples of comparators and methodologies to promote predictability and consistent application.
As regards the criteria for determining whether a foreign subsidy actually or potentially distorts competition, the Commission should:
consider narrowing the Draft Guidelines’ broad definition of “economic actors”, so it is more closely aligned with the consumer-welfare standard underpinning established competition law principles;
adopt a high threshold for intervention, supported by safe harbours. Specifically, the Commission should reconsider the “contributing factor” threshold for demonstrating a negative impact on competition, and replace it with a more rigorous standard based on a clear counterfactual analysis. Safe harbours would not only reinforce a high bar for intervention but also provide greater legal certainty and to allow the Commission to focus on cases with a real potential for significant distortions;
provide greater clarity on the assessment of distortions of competition in the context of concentrations. In particular, the Commission should refine the Draft Guidelines’ approach to deterring potential investors in acquisitions, which appears overly broad, and make clear that it will independently assess potential post-acquisition distortions (and explain how such an assessment will be carried out), even where the acquisition process itself does not raise immediate concerns.
With respect to the balancing test, the revised Guidelines should recognise the important differences between state aid and foreign subsidies, and set out clearly when and how benefits will be taken into account in the balancing exercise.
