Competition, antitrust and trade

Five things you should know about the EU Foreign Subsidies Regulation

Published on 12th Jul 2023

Additional layer of complexity for businesses as EU measure to prevent foreign subsidies distorting competition applies from today

Close up of people in a meeting, hands holding pens and going over papers

As from today (12 July 2023), the EU Foreign Subsidies Regulation (FSR) applies, adding an additional layer of complexity and potentially burdensome regulation on top of the existing EU merger control, competition law, state aid, public procurement and foreign direct investment (FDI) rules (for more on these generally, see our Insight).  

Here are five things any EU business needs to know about it.  

1. What is the FSR?  

The FSR enables the European Commission to investigate financial contributions from non-EU countries to EU companies and address any negative impacts they may have on competition.   

The European Commission can launch an investigation on its own initiative if it suspects that a non-EU subsidy may lead to a potential distortion of competition. 

Additionally, as from 12 October 2023, EU companies have to notify the European Commission if certain thresholds are met:  

  • For concentrations: if (i) the acquired company, one of the merging parties, or the joint venture is established within the EU and has a EU turnover of at least €500 million, and (ii) the parties involved have received aggregate non-EU financial contributions of at least €50 million over the previous three years
  • For public tenders: if (i) the estimated value of the contract is at least €250 million and (ii) the party involved received foreign financial contributions of at least €4 million per third country over the previous three years

2. What foreign financial contributions are included?  

The term "financial contributions" is broadly defined to include as many subsidies as possible.  

These include interest-free loans, unlimited guarantees, capital injections, preferential tax treatment, tax credits, grants and government contracts. Mere entitlement can be enough. 

"Foreign" includes non-EU central governments and public authorities as well as foreign public entities and private entity attributable to non-EU countries. 

3. What should EU companies do from now on? 

Companies should gather information on non-EU contributions received since 12 July 2018 and keep detailed records for a period of ten years. 

Financial contributions with the highest potential to disrupt competition should be prioritised, such as contributions to ailing businesses, those directly facilitating mergers or acquisitions, or providing unlimited guarantees.  

4. May past concentrations and tenders fall under the regime? 


As from 12 July 2023, the Commission can investigate potentially distortive non-EU subsidies that are up to ten years old (but not received more than five years before this date).

5. What happens if the FSR is not complied with? 

A company that does not comply with the FSR requirements may be subject to significant sanctions. "Gun jumping" may be punished with dissolution of the merger and fines of up to 10% of a company's worldwide turnover. The award of a public procurement contract may be prohibited. 

If you are would like to discuss any of the issues raised in this Insight, please get in touch with your usual Osborne Clarke contact, or one of the experts listed below. 


* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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