On 1 December 2024 the 2025-2029 College of Commissioners took office, led by President Ursula von der Leyen in her second term. This blog explores what companies can expect from the new Commission regarding the EU Foreign Subsidies Regulation (“FSR”).

The FSR was adopted in December 2022 to address distortions caused in the EU by foreign subsidies. It introduced two notification tools for prior clearance of concentrations and public procurement procedures – effective since 12 October 2023 – and an ex officio tool for investigations by the Commission into suspicious foreign subsidies – effective since 12 July 2023. For a detailed overview of the FSR, see our previous blog post.

Key takeaways

• The first year of FSR enforcement has seen a higher number of FSR notifications than the Commission anticipated in its 2021 Impact Assessment, in terms of both transactions and public procurement procedures. The Commission has initiated four in-depth investigations. By contrast, the ex officio tool has rarely been used with only two investigations launched.
• For its 2025-2029 mandate, the Commission is aiming to vigorously enforce the FSR, especially as regards concentrations.
• The Commission appears willing to discuss possible amendments to the FSR (in particular, to the public procurement notification thresholds).

The first year of FSR enforcement

The first year of FSR enforcement has seen a higher number of FSR notifications than the Commission anticipated in its 2021 Impact Assessment. Based on data disclosed by officials at conferences: (i) DG COMP, responsible for the enforcement of the FSR in relation to concentrations, received more than 100 transaction notifications (with 98 cases closed), compared to the 30 initially anticipated; and (ii) DG GROW, responsible for the enforcement of the public procurement tool, received approximately 140 notifications, compared to the 36 initially anticipated.

These notifications led the Commission to open four in-depth investigations to examine foreign subsidies that it suspected distorted the internal market. Three in-depth investigations concerned foreign subsidies in public procurement procedures, investigating manufacturers of clean tech (Longi and Shanghai Electric) and rolling stocks (CRRC). In each case, the Commission’s investigation led to the Chinese State-owned companies withdrawing their bids. In the fourth investigation, and only concentration, e&, the acquirer, owned by an Emirati sovereign wealth fund, offered commitments which led to a conditional clearance.

On the other hand, the Commission announced the opening of only two ex officio investigations (into Chinese manufacturers of wind turbines and of security equipment) – significantly lower than the expected 30-45 ex officio investigations per year. In one, the Commission conducted dawn raids on the EU subsidiaries of Nuctech, during which it attempted to access the electronic correspondence of Nuctech’s employees stored on its parent company’s servers in China. Nuctech refused to provide this correspondence and (unsuccessfully) applied to the EU Courts requesting the suspension of the investigation. Both investigations, and the related court case, are ongoing.

FSR enforcement going forward

As in the first year of FSR enforcement, companies can expect the new Commission to carefully review notifications under both notification tools. Further, more ex officio investigations could be launched in the sectors identified as being most affected by foreign subsidies and in relation to foreign subsidies deemed to be most harmful.

President Ursula von der Leyen’s Mission Letter to Executive Vice-President (“EVP”) Ribera, who is responsible for EU competition policy and thus for the transactional and ex officio FSR tools, asked EVP Ribera to “vigorously enforce the Foreign Subsidies Regulation, including by proactively mapping the most problematic practices that could lead to competition distortions”. This ‘proactive mapping’ suggests a potential increase in ex officio investigations during the Commission’s 2025-2029 mandate as it intends to focus its “ex officio efforts on the sectors most affected and types of foreign subsidies that are most harmful to fair competition in the Single Market” (see EVP Ribera’s written answers to the European Parliament’s questions, published on 22 October 2024).

EVP Ribera has also stressed that FSR enforcement will be of highest priority, including rigorous enforcement of, “specifically the part of that legislation that applies to concentrations”.

Executive Vice-President Séjourné, who will be responsible for Prosperity and Industrial Strategy including the public procurement FSR tool, has also confirmed that he will make full use of the FSR powers (See EVP Séjourné written answers to the European Parliament’s questions, published on 22 October 2024).

FSR assessment

The Commission must present an assessment of the FSR’s implementation to the European Parliament and the Council by 13 July 2026. This assessment may prompt the Commission to propose amendments to the legislation.

Notably, in his written answers to the European Parliament’s questions, EVP Séjourné clarified that the Commission will assess “the appropriateness of the level of the notification thresholds” and that “based on this assessment, if needed to ensure a level playing field for all companies on the internal market, the Commission will consider a possible legislative proposal to that end”.

On the transactional and ex officio fronts, EVP Ribera has not hinted to any forthcoming discussions to possibly amend the FSR.

It remains to be seen whether and how China’s investigation on the legitimacy of the FSR based on WTO rules may influence this process.