Since July 2023, the Foreign Subsidies Regulation has enabled the European Commission to review financial contributions that companies operating in the EU have received from non-EU countries. The aim is to prevent potentially competition-distorting effects of foreign subsidies. To this end, the Commission has been granted a general market investigation tool as well as two notification-based procedures covering concentrations and bids submitted in the context of large public procurement procedures within the EU.

Under the Regulation, companies involved in mergers or acquisitions must notify the Commission of financial contributions received from non-EU countries if certain thresholds relating to EU turnover and the amount of financial contributions received are exceeded. In public procurement procedures, the relevant criteria are the estimated contract value and the amount of financial contributions received. Where the applicable thresholds are met or exceeded, the notification is submitted to the contracting authority, which then informs the Commission. If the Commission determines that a financial contribution constitutes a distortive foreign subsidy and that its effects are not justified by broader social or economic benefits, it may intervene and impose structural or behavioural remedies on the companies concerned.

What should companies be aware of?

Although the Regulation primarily targets non-EU companies operating in the internal market, it also creates extensive reporting obligations for European companies regarding “financial contributions” received from third countries. The details are set out in the Implementing Regulation adopted in July 2023 and the corresponding notification forms. While the Commission has limited the reporting obligations through de minimis thresholds and various exemptions, the administrative burden associated with collecting and preparing the required information remains significant. This is particularly true for multinational corporate groups, which must document financial relationships with a wide range of countries.

What is the current state of play?

Nearly three years after the Regulation entered into force, the overall assessment is mixed. The number of notifications submitted to the Commission has significantly exceeded initial expectations, resulting in a considerable administrative workload. According to the Commission, 273 merger notifications had been filed by the end of May 2026. Approximately 99 percent of these cases were cleared during the initial review phase, with only three proceeding to an in-depth investigation. In the area of public procurement, more than 5,000 notifications or declarations were submitted during the same period, and only four cases resulted in an in-depth review. In some of these cases, bidders withdrew from the procurement process while the investigation was ongoing. At the same time, the Commission’s enforcement practice remains relatively non-transparent. Unlike EU merger control proceedings, publication requirements are limited, meaning that companies often have to rely on informal guidance from the Commission, individual decisions, and practical experience from advisors and market participants.

The Commission is nevertheless seeking to enhance legal certainty. It regularly updates the Q&A documents published on its website, issued a staff working document containing practical guidance in the summer of 2024, and adopted additional guidelines on key aspects of the Regulation in January 2026. These measures help reduce existing uncertainties and facilitate the practical application of the rules. Despite these efforts, companies continue to criticize the significant administrative burden associated with the notification requirements, particularly given that only a very small number of the extensive filings made to date have resulted in an in-depth investigation.

Proving its value, while revealing a need for reform

Particular attention should be paid to the first evaluation report on the Foreign Subsidies Regulation, published by the Commission in July 2026. In this report, the Commission concludes that the Regulation is generally “fit for purpose” and makes an important contribution to safeguarding fair competition within the internal market. At the same time, it expressly acknowledges that the extensive data collection and reporting requirements entail substantial costs and administrative burdens for businesses.

Against this backdrop, the Commission has announced targeted reforms for 2026 and 2027. These include, among other measures, simplifications for non-problematic cases, a review of the notification thresholds, and procedural streamlining. The objective is to reduce the burden on businesses without undermining the effectiveness of the instrument in addressing genuinely distortive foreign subsidies.

Outlook

In a relatively short period of time, the Foreign Subsidies Regulation has become another key pillar of European competition and internal market law. Initial experience suggests that the Commission is actively using the instrument and that companies must now firmly integrate the new notification requirements into their M&A and public procurement processes. Whether the announced simplifications will be capable of significantly reducing the administrative burden will be a key factor in determining whether the Regulation is perceived in the long term as both effective and proportionate. It should also be noted that the Foreign Subsidies Regulation has already attracted strong criticism from certain third countries. As a result, it is not merely a competition law instrument but may increasingly become the subject of trade policy and geopolitical disputes.