On 14 July 2026, the European Commission published a staff working document reviewing the early implementation and enforcement of the Foreign Subsidies Regulation (FSR), which has been applicable since 13 July 2023. The report covers all sectors and economic activities in the internal market and marks the first mandatory review under Article 52(2) of the regulation, with subsequent reviews due every three years.
The FSR fills a regulatory gap by addressing distortions caused by subsidies granted by third countries, complementing EU State aid, merger control, antitrust, and trade defence rules. The regulation has been phased in: notification obligations for concentrations and public procurement started on 13 October 2023, while Member State assistance rules applied from 13 January 2024. The Commission can investigate ex officio and review ex ante notifications of concentrations (Chapter 3) and public procurement bids (Chapter 4).
Key concepts under the FSR include foreign financial contributions (FFCs) as the starting point, with a foreign subsidy requiring a benefit limited to specific undertakings or industries. The distortion assessment under Articles 4 and 5 uses two cumulative criteria: an improved competitive position and an actual or potential negative effect on competition. A balancing test under Article 6 may weigh positive effects against negative ones, but cannot result in a less favourable outcome for the undertaking.
Implementation responsibilities are shared between DG Competition and DG Internal Market, Industry, Entrepreneurship and SMEs (GROW). The FSR interacts with the EU Merger Regulation, the FDI Screening Regulation, and the Public Procurement Directives.
The report provides an overview of the Commission's enforcement activities since the regulation became operational. It notes that the FSR gives the Commission tools to investigate and remedy distortive foreign subsidies across all sectors, with the first mandatory review report due by July 2026.
EU-based companies competing with foreign-subsidised rivals may benefit from a more level playing field, while third-country investors face new notification obligations and potential remedies. National authorities gain a new cooperation framework but may see increased administrative coordination demands. Legal practitioners and businesses must adapt to new compliance requirements, particularly for concentrations and public procurement bids involving foreign financial contributions.
The European Parliament and Council will review the report, and the Commission will conduct further reviews every three years. The report may inform potential adjustments to the FSR's scope or enforcement approach.