On 9 January 2026, the European Commission published Guidelines on the interpretation of certain concepts essential to the application of the Foreign Subsidies Regulation.
The Foreign Subsidies Regulation is intended to regulate subsidies that are granted by third countries and that are deemed to distort competition within the internal market.
The Guidelines clarify: - How the Commission will carry out the assessment of “distortions” - briefly, it will first examine if the foreign subsidiary strengthens the company’s competitive position within the European Union, and secondly, it will consider the impact on competition. - How the Commission will assess distortions within the sphere of public procurement procedures - firstly, the Commission will assess whether the company in question has utilized the foreign subsidiary in designing its bid; if the answer is in the affirmative, the Commission will assess whether the bid is unduly advantageous. If that is the case, the Commission will then consider whether the advantage stems from the foreign subsidy or from other elements.
The Commission also clarifies how the balancing test in Article 6 of the Foreign Subsidies Regulation will be applied. The Guidelines also introduce new safe harbours from call-in procedures, essentially clarifying that in the case of low value public procurement procedures subsidies below EUR 4 million, and subsidies addressing certain extraordinary circumstances, will not be subject to a call-in procedure for evaluation.
