The FSR At Three: Potentially Higher Filing Thresholds, But No Change Of Course From The Commission

Three years after the Foreign Subsidies Regulation (FSR) entered into force, the European Commission has published its first statutory review of the regime.

The Commission’s headline conclusion - that the FSR is “fit for purpose” - is unsurprising. More significant for businesses is the Commission’s acknowledgement that the notification procedures can impose disproportionate burdens, and that targeted adjustments may be needed to make the regime more workable without weakening its effectiveness. Whether those changes will deliver meaningful simplification, rather than modest procedural tinkering, remains to be seen.

The review was mandated by the FSR itself and covers the period from October 2023 to the first half of 2026. It draws on an independent study, a public consultation, targeted stakeholder interview, and the Commission's own enforcement experience. Together, these provide the basis for the Commission's assessment of how the regime has operated in practice and whether changes are needed. Below, we outline the key findings and main areas of stakeholder feedback, as well as the Commission's response.

Possible procedural changes for mergers 

The merger notification regime has proven more active than anticipated. The Commission has received around 100 notifications per year, but only opened three in-depth investigations since the regime entered into force (and four cases have been withdrawn by the parties).

Of the in-depth investigations that have been opened, two were conditionally approved after the parties offered commitments to address distortive foreign subsidies: e&/PPF Telecom and ADNOC/Covestro. The third, JD.COM/CECONOMY, remained ongoing at the time of the review’s publication. Notably, the Commission has not exercised its call-in powers for below-threshold concentrations during the review period.

The review highlights two main stakeholder concerns.

• Uncertainty around the Commission's call-in powers, which stakeholders view as potentially disruptive for transaction planning and risk assessments. The Commission has not addressed this concern in detail, offering no additional clarity beyond the guidance already set out in the January 2026 FSR Guidelines.
• Concerns regarding the foreign financial contribution (FFC) data collection process, which stakeholders regard as resource-intensive and disproportionately broad. On this point, the Commission is more receptive, signalling that it will consider introducing procedural adjustments to reduce the administrative burden for merger parties.

The welcome procedural adjustments the Commission is considering comprise:

• raising the turnover notification threshold;
• introducing a simplified notification, for specific cases or FFCs;
• increasing the reporting thresholds for FFCs, so that smaller contributions no longer need to be reported; and
• introducing additional exemptions from reporting requirements for FFCs not categorised as foreign subsidies most likely to distort the internal market.

The Commission’s accompanying analysis considers increasing the target’s EU turnover threshold from €500m to €600m. Although not transformative, this would be a meaningful change: according to the Commission’s analysis, it could reduce the number of merger notifications by around 16%.

Continuing substantive uncertainty

Stakeholders’ principal substantive concern is the lack of legal certainty around several of the FSR’s core concepts.

In particular, respondents reported difficulty predicting how the Commission will assess whether a foreign subsidy distorts the internal market, given the limited decisional practice available to date. Uncertainty also remains around the categories of subsidies considered most likely to distort, including what it means for a subsidy to “directly facilitate” a concentration or to enable the submission of an “unduly advantageous” tender.

The Commission does not regard these concerns as evidence that the legislation itself requires amendment. Instead, it sees them as a feature of a relatively new regime and expects greater certainty to emerge gradually through decisional practice and soft-law guidance.

Its preferred tools are therefore updated Q&As, non-confidential decisions, further FSR Briefs, and the Guidelines published in January 2026. The message is that the Commission expects clarity to develop organically, as its decisional practice accumulates.

No changes to ex-officio powers

The Commission is similarly satisfied with the operation of its ex-officio powers and does not consider that substantive or procedural changes are currently required. To date, only two in-depth ex-officio investigations have been launched, into Nuctech (threat detection systems) and Goldwind (wind turbines). Both investigations are ongoing, and investigative measures in each have been challenged before the General Court.

Stakeholders have raised concerns about the length of the ex-officio investigations. The Commission attributes the delays to the complexity of the cases, limited co-operation by the undertakings concerned, and legal challenges to its investigative measures.

In short, the Commission's position is that the length of its investigations to date is not indicative of flaws in the ex-officio enforcement system.

Compliance challenges in public procurement 

The public procurement regime has been the most active of the FSR's three enforcement pillars, but also the one where practical challenges have been most apparent.

5,150 submissions were received between October 2023 and May 2026, but only four led to in-depth investigations. One resulted in a final decision with commitments: the Lisbon Metro Violet Line case, which led to the replacement of a Chinese subcontractor (CRRC Portugal) by the winning consortium.

The remaining three investigations were closed after the economic operators withdrew from the tenders.

The Commission presents these withdrawals as evidence of the FSR’s deterrent effect, with bidders choosing to exit processes rather than face detailed Commission scrutiny. Furthermore, when the Commission exercised its below-threshold call-in powers for the first time, the relevant bidder failed to comply with the resulting notification obligation. The contracting authority subsequently excluded the bidder after finding its tender inadmissible, inappropriate, and technically unacceptable.

The review also suggests that bidders are struggling to comply with the notification obligations. As part of the review the Commission conducted an analysis comparing large procurement procedures published in Tenders Electronic Daily with those with at least one FSR submission. This suggested that compliance levels fell in 2025, after increasing between 2023 and 2024.

Additionally, stakeholders have raised concerns about the administrative burden arising from broad reporting obligations, complex thresholds, and submission forms. The Commission appears to share these concerns, signalling, as with mergers, that it will consider introducing procedural changes to reduce this burden, comprising:

• simplifying the notification and declaration forms;
• making it easier for companies to request waivers, to limit what they have to disclose;
• clarifying and reducing the reporting burden for FFCs unlikely to distort the internal market; and
• clarifying the rights and obligations of companies and contracting authorities, including around confidentiality and access to file.

What happens next?

The review indicates that the Commission has no appetite to reopen the FSR’s legislative architecture, only three years after the regime began to apply. Its focus is instead on targeted procedural simplification, while leaving the substantive framework and its enforcement powers largely untouched, with greater clarity expected to emerge through future decisional practice.

The Commission has already begun preparing procedural adjustments and intends to publish draft measures for consultation in autumn 2026. Depending on the feedback received, the final changes are expected to be adopted in 2027.

The proposals may provide welcome relief, particularly if the merger notification thresholds and FFC reporting thresholds are increased. However, they are unlikely to resolve the broader substantive uncertainties that continue to make FSR analysis difficult. To address those uncertainties, businesses will remain dependent on the gradual development of the Commission’s decisional practice.