The European Commission concludes in its first review of the Foreign Subsidies Regulation (FSR) that the Regulation has filled a regulatory gap and remains “fit for purpose”. At the same time, the Commission recognises that the administrative burden associated with the notification regimes may be reduced while maintaining the effectiveness of the FSR.
Last week, the Commission published its report on the first review of the FSR. The law requires the Commission to assess the regulation’s implementation and enforcement every three years. The review is based on the Commission’s case practice, a public consultation, targeted stakeholder engagement, and an external supporting study.
As a quick recap, the FSR is meant to address distortions caused by subsidies granted by third countries, which fall outside the European Union’s State aid rules. It provides for the mandatory notification and review of certain concentrations and for notifications or declarations in certain public procurement procedures.
The stated purpose of the FSR is to preserve fair competition and a level playing field in the EU’s internal market. This policy objective is reflected in a statement from Commission Executive Vice-President Teresa Ribera’s: “Europe remains open to investment, but openness requires fair competition.” While the Commission concludes that the Regulation is achieving this objective, the supporting study and stakeholder feedback identified a number of practical difficulties in its application.
Broad reporting and questions of proportionality
Much of the administrative burden stems from the breadth of the information that companies must collect and report. The starting point is the concept of foreign financial contributions (FFCs). As discussed previously on this blog, an FFC is much broader than a foreign subsidy. It includes not only grants and other forms of public support but also loans, guarantees, tax measures and ordinary commercial transactions with public bodies, even where concluded on market terms.
Companies must therefore collect information on a broad range of financial interactions before it can be determined whether any of them constitute foreign subsidies capable of distorting the internal market. For multinational groups, gathering this information across multiple subsidiaries and jurisdictions can become a significant exercise in itself, especially given the three-year reporting period. It is therefore unsurprising that 77% of the respondents to the Commissions survey reported that collecting the required information demanded substantial internal administrative and legal resources.
The supporting study also shows that the burden extends beyond the collection of FFC information. Stakeholders also raised concerns about reporting thresholds and uncertainty over key concepts. 55% considered the available guidance insufficient or unclear on important issues, although interaction with Commission case teams was generally assessed more positively. In addition, 85% of respondents reported delays to transaction or procurement timelines as a result of FSR requirements.
The Commission’s own figures reinforce these findings. By 31 May 2026, it had received 272 concentration notifications and 5,150 submissions in 863 public procurement procedures. Yet only three concentration cases and four public procurement cases proceeded to an in-depth investigation. Although the Commission points to the regulation’s deterrent effect, the figures nevertheless raise the question whether the current notification regimes remain proportionate to the very limited number of cases that ultimately required detailed scrutiny.
Targeted procedural adjustments
Against this background, some stakeholders advocated a more fundamental reform. The German Federal Government, for example, proposed replacing mandatory concentration notifications with a voluntary filing system combined with Commission call-in powers.
The Commission, however, does not support that approach. Instead, it is considering a limited number of procedural adjustments intended to reduce the administrative burden while preserving the existing notification system.
- For transactions, the Commission is considering changes both to the filing threshold and to the content of notifications. Options include increasing the EUR 500 million EU turnover threshold to EUR 600 million, introducing shorter notification forms, raising reporting thresholds for individually reportable FFCs and expanding exemptions for categories of contributions considered unlikely to raise concerns.
- The supporting study nevertheless suggests that the expected effects of the proposed measures may differ. While increasing the turnover threshold to EUR 600 million would have reduced notifications in the reviewed sample by only around 16%, simplifying reporting obligations appears likely to have a greater practical impact on reducing the administrative burden.
- In public procurement, the same information gathering-burden is compounded by repeated submissions. Regular bidders in large tenders may be required to provide substantially the same information in multiple procedures. From October 2023 to January 2026, the 40 most frequent filers accounted for 16% of all submissions (672 in total). The Commission is therefore considering annual or twice-yearly declarations for frequent filers, which could subsequently be updated for individual procurement procedures. According to the Commission’s Staff Working Document, such a system could have reduced submissions by these most frequent filers by around 76%.
- Separately, the Commission is considering simpler forms, revised waiver arrangements and more limited reporting of contributions outside the categories of foreign subsidies most likely to distort the internal market. These measures are intended to reduce the burden associated with each individual filing.
Evolution rather than reform
The review shows that the debate has shifted from the justification for the FSR itself to the practical operation of its notification regimes. While some stakeholders advocated more fundamental reform, the Commission has limited itself to targeted procedural adjustments within the existing framework.
The Commission intends to consult on draft procedural changes in autumn 2026, with adoption envisaged in 2027. Until those changes take effect, the existing notification thresholds, reporting obligations and procedural rules remain unchanged. Businesses should therefore continue to integrate FSR compliance into transaction planning and public procurement strategies at an early stage.
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