Although the Foreign Subsidies Regulation ("FSR") entered into force as early as 2023, the monitoring carried out by the Commission only began to gain real traction in 2024, the first full year of the Regulation's operation. The Commission's oversight under this Regulation aims to prevent undertakings from non-EU countries from competing unfairly in the European market using foreign state aid. The Commission monitors this through three instruments:
- A notification requirement for concentrations (mergers and acquisitions) of a certain size where a certain amount of foreign financial contributions have been received;
- A notification requirement for bids on tenders of a certain size, where the bidder has received a certain amount of foreign financial contributions;
- So-called ex officio monitoring: investigation of subsidies that are not notifiable in the context of the first two categories. The Commission can conduct this investigation on its own initiative.
We refer to our earlier article on the FSR discussing the scope of these thresholds. The notification obligations apply to all mergers and public procurement procedures where the thresholds are exceeded, regardless of whether the company originates from within or outside the EU.
This also seems to be one of the reasons why the Commission appears to have vastly underestimated the number of notifications it expected to receive. The Commission expected about 30 merger notifications per year, but received more than three times as many (now over 100). In one merger case, the Commission imposed conditions on the acquisition by Emirates Telecommunications Group of Netherlands-based PPF, a telecoms services provider operating mainly in Eastern Europe.
The same applies to notifications in tenders in procurement procedures: where the Commission expected 36 notifications, but has already dealt with 140 so far. In a number of tender procedures, the Commission launched investigations into the participation of Chinese companies, but those investigations were discontinued when the companies concerned decided to withdraw from the tenders in question: It concerned the participation of Shanghai Electric and ENEVO Group in tenders for solar panel parks in Romania and the participation of Chinese company CRCC in a tender in Bulgaria for railway vehicles.
This also perhaps explains why the Commission has been able to conduct fewer ex officio investigations than expected. Only two investigations were launched, whilst the Commission had hoped to start 35 to 40 investigations a year. One investigation related to airport security equipment and the other investigation looked into Chinese companies' participation in tenders for wind farms in Spain, Greece, France, Romania and Bulgaria. The first investigation was launched with a dawn raid in the Netherlands, among other countries, on the firm Nuctech, which unsuccessfully challenged the legality of the raid at the General Court.
Our expectation is that FSR enforcement will increase in 2025. The experience gained from that enforcement is also expected to feed into the Commission's drafting of Guidelines to clarify the application and interpretation of specific FSR provisions. The Commission has committed to publish those Guidelines by January 2026.
