Managing Foreign Subsidies in the EU

In this paper, we describe the European Union’s approach to control harmful effects of foreign subsidies on the EU internal market. The EU policy in this area is set out mainly in the EU State aid rules. The purpose has been to identify and avoid harmful support measures while allowing governments to continue to use State aid to facilitate the development of certain economic activities. The effect of subsidies has – to a limited extent – also played a role in the EU antitrust and merger policy. In recent years, the need for the control of EU State aid to be complemented by a control of subsidies granted by non-EU government has been increasingly recognised. The Commission identified a regulatory gap that is captured neither by existing competition, nor by trade instruments. The EU legislators agreed on a new Regulation on foreign subsidies distorting the EU internal market in 2022. This Regulation entered into force in January 2023. The Regulation lays down rules and procedures for investigating foreign subsidies that favour companies in a way that negatively affects competition in the EU internal market and for addressing such distortions and its main lines will be presented in this paper.

By João Azevedo^[1]

I. INTRODUCTION

In this paper, we describe the European Union’s approach to control harmful effects of foreign subsidies on the EU internal market.

A new Regulation on foreign subsidies (“FSR”) distorting the EU internal market was agreed on in