Familiar Tools in Foreign Settings: Practical Considerations for Complying With the New Foreign Subsidies Regulation

The introduction of the Foreign Subsidies Regulation (“FSR”) aims to address an existing regulatory gap in ensuring a level playing field in the internal market. The FSR will have far-reaching consequences for companies operating in the EU, particularly those that are planning mergers or acquisitions or engaging in large public tenders. The European Commission has highlighted that, “in substance,” the FSR will be similar to state aid control. Therefore, drawing on insights from assessments in the state aid context, this article discusses the economic tools that could be used to assess whether a financial contribution from a third country confers a benefit on an undertaking. If a financial contribution is found to constitute a foreign subsidy, the Commission has indicated that an assessment of the likely distortions to competition caused by the foreign subsidy will be particularly important. In the context of the assessment of concentrations and public procurement procedures, this is likely to require relatively new theories of harm to be examined. This article therefore also discusses, from an economics perspective, how the assessment of the distortions to competition could be carried out in practice, and the possible interactions with the EU Merger Regulation (the “EUMR”). 

By Nicole Robins & Francisco Couto^[1]

I. INTRODUCTION

The European Commission’s Foreign Subsidies Regulation (“FSR”) entered into force on January 12, 2023. This new