Brussels, January 9, 2026 — The European Commission has published long-awaited guidelines under the Foreign Subsidies Regulation, setting out how it will assess and address distortions caused by state support granted outside the EU to companies active in the internal market.
The guidance aims to increase predictability and transparency for companies subject to the regime, including in merger transactions and public procurement procedures. It clarifies how the Commission determines whether a foreign subsidy distorts market outcomes, how any negative effects are weighed against potential benefits, and when the authority may require prior notification of transactions that fall below statutory thresholds.
Assessment of Distortions
Under the guidelines, the Commission will follow a two-step approach when assessing distortive effects. First, it will examine whether a foreign subsidy strengthens a company’s position within the EU. For subsidies not directly targeted at EU activities, the Commission will conduct a more detailed analysis to determine whether the support could be used to cross-subsidise operations in the internal market.
Second, the Commission will assess whether the subsidy is liable to alter market behaviour or dynamics to the detriment of other operators. The guidelines include a non-exhaustive list of subsidy types that may raise concerns.
Public Procurement Focus
The guidelines also explain how distortions will be assessed in public procurement procedures. Where the Commission has indications that a foreign subsidy may have influenced the terms of a tender, it will examine whether the subsidy was used in designing the bid.
If so, the Commission will assess whether the offer is unduly advantageous by comparing it with competing bids and the contracting authority’s cost estimates. Where an undue advantage is identified, the authority will then determine whether it stems to an appreciable extent from the foreign subsidy rather than from legitimate commercial factors.
Balancing Test and Remedies
The guidance details how the Commission will apply the balancing test under the regulation, weighing the negative effects of a distortive subsidy against any positive effects that are specific to that subsidy. Factors considered will include the severity of the distortion and whether the positive effects could be achieved without it.
If positive effects outweigh the negative ones, the Commission will not intervene. Otherwise, it may accept commitments or impose redressive measures. The guidelines also outline the types of evidence companies may submit in support of their arguments.
Call-In Powers and Safe Harbours
The Commission confirmed it may require prior notification of certain non-notifiable concentrations or procurement procedures where it suspects foreign subsidies have been granted in the previous three years. The assessment will consider factors such as market impact, strategic importance, and the likelihood of distortion.
The guidelines introduce safe harbours, excluding low-value procurement procedures, subsidies below €4 million, and subsidies granted to address certain extraordinary circumstances from call-in requests. Any intervention must take place before a transaction is implemented or a contract awarded.
Background
The guidance follows extensive consultations conducted throughout 2025 with member states, businesses, legal and economic experts, academics, and consumer representatives. The Foreign Subsidies Regulation entered into force on July 13, 2023, and requires the Commission to publish guidelines by January 13, 2026.
The regulation also mandates a report to the European Parliament and the Council reviewing enforcement practice by July 14, 2026, which may be accompanied by legislative proposals.
Teresa Ribera, executive vice-president for clean, just and competitive transition, said: “With the release of the Foreign Subsidies Regulation Guidelines, we are giving organisations a clear and practical way to turn good intentions into action. The Guidelines set out shared expectations for responsible decision-making, so investments can move forward in a way people can trust.”
Stéphane Séjourné, executive vice-president for prosperity and industrial strategy, added: “Our goal is to ensure that European companies compete on a level playing field. With these new Guidelines, we are providing clarity on how we address the distortive effects of foreign subsidies in public tenders. By aligning EU procurement procedures with the principles of merit and fair play, we are protecting the Single Market and ensuring that public investment continues to support industrial leadership and competitiveness across Europe.”
Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_26_43
