The EU Foreign Subsidy Regulation– What, Why and How?

With the new Regulation on Foreign Subsidies distorting the Internal Market (FSR), the EU wants to close several gaps in its current toolbox, foster its new industrial strategy and create a level-playing field on its internal market, thereby increasing competition on the merits. Contrary to FDI control, at least at the outset, security concerns play a minor role in the discussions around regulating foreign subsidies on the EU internal market. The focus lies on economic concerns: the level playing field in the EU internal market. Specifically, the EU fears a far-reaching involvement of non-EU State-owned enterprises in its internal market to the detriment of EU competitors. This chapter will first give an overview of the new FSR and, second, explore the alignment and interdependencies of the new instrument with existing EU screening instruments, with a focus on merger and FDI control tools. The chapter supports foreign subsidy control in general but takes a sceptical view towards the new Regulation when it comes to coordination and alignment with existing policies. It concludes by placing the proposal in the context of other recent developments and a general increased governmental involvement and control of economic activities in the EU