The Foreign Subsidies Regulation and Foreign Direct Investment: How to Reconcile?

On 28 November 2022, the Council of the European Union gave its final approval to the new EU Foreign Subsidies Regulation 2022/2560 (the FSR). The regulation addresses distortions created by subsidies that are granted by non-EU countries to companies operating in the EU single market. It lays down the procedural rules for investigating these subsidies mainly in the context of large concentrations and bids in large public procurement procedures, together with an ex officio tool to investigate also other measures.  In doing so, the regulation aims to restore fair competition between all companies operating in the internal market, “both European and non-European alike”, claims the Council of the European Union. However, in the wake of the heightened attention to FDI screening and national security in the EU, it is legitimate to ask whether the Council’s assertion is credible. Will a subsidy from, say, Russia, or North Korea actually be treated equally to a subsidy from the UK? To this, and other emerging interactions between FSR and FDI, we devote the following pages.

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