CCCEU Responds to the European Commission's First Review of the Foreign Subsidies Regulation

July 14, Brussels

Q: The Commission's Foreign Subsidies Regulation report was just released. Do the proposed changes go far enough according to the CCCEU?

A: The CCCEU takes note of the European Commission's release of its first review of the Foreign Subsidies Regulation (FSR). We welcome the Commission's recognition that the implementation of the FSR can be further simplified and made more transparent. The proposed adjustments, particularly those aimed at reducing administrative burdens, raising notification thresholds, expanding exemptions and improving procedural clarity, are positive steps that respond to concerns raised by the business community.

However, in our view, these changes do not yet go far enough. Further improvements are needed to address several practical challenges, including extensive reporting obligations related to foreign financial contributions, uncertainty regarding the scope of certain notification requirements, and the broad discretion available to the Commission in certain procedures.

In practice, Chinese companies have been among the businesses most affected by the implementation of the FSR. Many have faced extensive information requests covering their global group structure and operations, significant compliance costs, and challenges in reconciling FSR disclosure requirements with applicable laws and regulatory requirements in different jurisdictions. They have also encountered uncertainty regarding the interpretation and application of certain provisions, including the Commission's call-in powers.

While the proposed adjustments can help reduce some administrative burdens, further improvements are needed to enhance legal certainty, proportionality and predictability. In particular, clearer criteria and appropriate safeguards are needed regarding the exercise of the Commission's powers across different enforcement areas, including in concentrations, public procurement procedures and ex officio investigations, to ensure that enforcement remains targeted, proportionate and predictable.

The CCCEU believes that the implementation of the FSR should remain evidence-based and focused on demonstrable economic effects. Assessments should be based on objective criteria and demonstrated economic effects rather than assumptions linked to the nationality, ownership or origin of companies.

The CCCEU encourages EU institutions and stakeholders to continue the dialogue on how to further improve the FSR framework. A balanced approach will be essential to ensure that the FSR is implemented in a proportionate, transparent and predictable manner, while maintaining Europe's openness and attractiveness as an investment destination.

The CCCEU remains committed to constructive engagement with all relevant stakeholders to support a fair, transparent and predictable regulatory environment.