The Foreign Subsidies Regulation: An Ambitious Instrument that Raises Significant Challenges

This contribution discusses the recently adopted Regulation (EU) 2022/2560 on foreign subsidies distorting the internal market, usually referred to as the Foreign Subsidies Regulation or “FSR”. After providing some context, the contribution reviews the main steps followed by the EU towards the adoption of the FSR as well as its main content. The FSR is a complementary instrument aimed at limiting distortions in the internal market caused by subsidies granted by non-EU countries and appears to be in line with EU’s previous initiatives. In particular, the FSR addresses a gap in EU Law that has been identified for some time. The paper concludes that, while generally positive, the FSR’s far-reaching scope and reporting obligations pose some challenges for legal certainty and implementation.

By Juan Jorge Piernas López^[1]

I. INTRODUCTION

The control of State aid as part of the competition law provisions has traditionally been a “European peculiarity,”^[2] a “unique system inextricably linked to the European Union (“EU”) integration process.”^[3] The Treaty system of State aid control is based on a general rule of incompatibility of aids, included in today’s Article 107(1) TFEU, coupled with a number of exemptions, enshrined mainly in Articles 107(2) and 107(3) TFEU, and an ex ante control by the European Commission, that must be notified by the Member States of any planned aid. As the Court of Justice of the EU has underlined “The aim of that sy