The European Commission is working on guidelines under the EU Foreign Subsidies Regulation (FSR), which it must publish by January 2026, on the standards to determine whether non-EU subsidies are likely to distort the EU internal market, on how it will determine whether possible benefits of such subsidies outweigh the expected harms (the so-called “balancing test”), and on how the European Commission should apply its power to require notifications in relation to concentrations or public tenders that do not meet the FSR’s mandatory notification thresholds (a so-called “call-in power”).  

The call for evidence

The European Commission published a general “call for evidence” from any interested parties on the proposed guidelines in March 2025, while reaching out proactively to solicit views from key stakeholders using a “targeted consultation.” 

In the targeted consultation, the European Commission requests specific input on (among other things) criteria and indicators for: 

• determining whether “a foreign subsidy is liable to improve the competitive position of an undertaking in the internal market,” 
• whether “that foreign subsidy actually or potentially negatively affects competition in the internal market,” 
• how to assess the possibility that the foreign subsidy could potentially be used in the internal market or could potentially improve the undertaking’s activity in the internal market (e.g., level playing field, consumer welfare, the competitive position of competitors, the competitive process or other elements).   

In relation to the balancing test, the European Commission sought input on which positive effects are relevant and how they should be measured. The European Commission also sought views on characteristics of the companies involved (e.g. financial structure, business plan, sector, etc.) and relevant markets that may be relevant to the balancing test.  

The EC's call-in powers

Regarding the European Commission’s call-in powers, the FSR empowers the European Commission to require notification of sub-threshold transactions without relying on Member State authorities to refer such transactions to the European Commission (as in the EU Merger Regulation). The European Commission is understood to have considered requiring notification of several sub-threshold transactions under the FSR but so far has not done so. 

Additionally, the European Commission sought input on factors considered relevant for the exercise of this power – such as particular sectors or types of tender procedure – as well as examples of concentrations or tenders where the European Commission should have required notification.  

Other requests for input

More generally, the European Commission sought input on potential improvements in the FSR’s guiding principles, procedures, and structure to enhance the FSR’s predictability and transparency, while minimizing the administrative burden for companies. For example, the European Commission wants to introduce a simplified procedure under the FSR similar to that applied under the EU Merger Regulation but is unsure what criteria would be appropriate. 

The European Commission is also open to granting waivers from burdensome information requirements in its notification forms or potentially excluding from the information obligations activities of large groups unrelated to the notified transaction or tender to reduce the scope of information it needs to review.  

How will companies be affected?

Because companies need to start collecting information for FSR notifications well ahead of notifiable transactions or tenders, however, the benefit of such measures for companies caught by the FSR may be limited. A better approach would be to clarify and expand exemptions from the requirement to provide information in notification forms, such as the current exemption for public contracts entered into in the ordinary course and on market terms.  

The stakeholders targeted by the European Commission include a wide variety of industry and professional organizations such as the American Chamber of Commerce, Business Europe, the European Roundtable, and the International Chamber of Commerce.  

Companies concerned by the administrative burden and cost of FSR compliance should consider working with organizations in their industries to ensure that their views are heard to obtain the greatest possible improvements via the forthcoming guidelines and potential amendments to the notification forms or even the FSR itself.