Do We Really Need the EU Foreign Subsidy Regulation?

This article critically questions the regulatory gap and the need for the new Foreign Subsidy Regulation in its current scope. EU law lacks an instrument guaranteeing equality of opportunity with EU State Aid law for subsidies granted by third states. Without a State Aid equivalent, companies subject to EU state aid law would be at a disadvantage compared to their competitors receiving foreign subsidies. The new notification-based tools for concentrations and public procurement procedures in the Foreign Subsidy Regulation go beyond that and what is necessary, putting third-country subsidies at a disadvantage compared to undertakings receiving Member State subsidies which are subject to EU state aid law not containing specific merger or public procurement obligations. The Foreign Subsidy Regulation puts an extra regulatory burden on third country subsidized companies.

By Lena Hornkohl^[1]

I. INTRODUCTION

After a short legislative period, a new and far-reaching EU instrument recently saw the light of the day: The Foreign Subsidy Regulation (“FSR”) was published in the Official Journal on December 23, 2022.^[2] The FSR empowers the Commission to investigate subsidies granted by non-EU countries to undertakings engaged in economic activities within the EU. Under the FSR, the Commission has access to three instruments to assess foreign subsidies. Firstly, the general ex officio tool grants the Commission the authority to investigate any market behavior of foreign subsi