The Foreign Subsidies Regulation's Initial Focus On China

Although the text of the Foreign Subsidies Regulation (FSR) is not aimed at specific countries, the European Commission's initial enforcement actions appear to be targeting Chinese subsidies. Companies with Chinese parent companies should take note and expect significant scrutiny of their tender and M&A activities. Similarly, companies selling assets or businesses to China-backed buyers need to amend deal timing estimates if an FSR notification is required.

The FSR allows the Commission to scrutinise financial contributions granted by non-EU governments to companies active in the EU internal market (see ourJuly 2023newsletter). Although the FSR grants the European Commission powers to investigate foreign subsidies from any non-EU country, the Commission's initial enforcement actions appear to target China: