Filed, Cleared, Withdrawn: What the First FSR Review Shows About EU Market Access for State-Backed Bidders

What the Review Settles

The Commission's first review of the Foreign Subsidies Regulation, published on 14 July 2026, does not change what any company must do. It confirms that the regime "functions effectively and does not require structural changes" and that the Commission "currently considers that there is no sufficient basis to revise" the EUR 250 million procurement threshold². Any enterprise planning a large EU acquisition or bidding for a large EU public contract should treat the current filing obligations as permanent features of deal and bid planning, not as a transitional burden awaiting relief.

What the review does add is the first official aggregate record of how those obligations have worked. That record is useful because of what it shows about who actually meets resistance. Almost every filing clears. Almost all of the friction falls on a narrow set of Chinese and Gulf state-linked bidders and acquirers. That friction has taken the form of withdrawals, commitments and replaced subcontractors. None of the sources examined for this brief reports a fine. For most EU-active groups, the regime is a disclosure and timing obligation. For bidders backed by a third-country state, it has worked as a market-access gate that sorts them out of tenders without a penalty ever being imposed.

The Instrument and Who It Binds

The instrument is Regulation (EU) 2022/2560 on foreign subsidies distorting the internal market, published in the Official Journal on 23 December 2022¹. The Commission states that it has applied since 13 July 2023, which is when its ex officio powers began. The notification obligations for concentrations and public procurement above the thresholds have applied since 13 October 2023³.

Two filing duties sit at its centre.

1. Concentrations (Article 20(3)). A merger, acquisition or joint venture must be notified and cleared before completion where at least one merging party, the target or the joint venture is established in the EU with EU turnover of at least EUR 500 million, and the parties received combined foreign financial contributions of more than EUR 50 million from third countries over the preceding three years¹⁴.
2. Public procurement (Articles 28 and 29). An economic operator must notify all foreign financial contributions where the estimated contract value is at least EUR 250 million net of VAT and the operator received at least EUR 4 million per third country over three years. For a tender divided into lots, the lot-level threshold is EUR 125 million¹⁵. Below those thresholds, the bidder files a declaration listing its contributions instead of a full notification¹.

Two features of the procurement regime matter more than their drafting suggests. First, the duty reaches beyond the bidder. Article 29(5) extends it to "main subcontractors and main suppliers known at the time of submission", and a subcontractor or supplier is deemed main "in any case where the economic share of their contribution exceeds 20 % of the value of the submitted tender"¹. Second, the Commission's review suspends the award. During the preliminary review and any in-depth investigation, "all procedural steps in the public procurement procedure may continue, except for the award of the contract" (Article 32(1))¹. If a notification stays incomplete after a Commission request, the Commission must declare the tender irregular and ask the contracting authority to reject it (Article 29(4))¹.

The penalties are set out but, on the record reviewed here, unused. In procurement, Article 33 allows fines of up to 10% of aggregate turnover for failing to notify, and up to 1% for supplying incorrect or misleading information¹.

What Three Years of Filings Show

The Commission's figures run to 31 May 2026²:

Two practitioner readings of the same review report 273 merger notifications and a preliminary closure rate of around 97%⁶⁷. Cleary Gottlieb reports that 99% of mergers cleared without an in-depth review⁸. The Commission's own question-and-answer text shows 272 and 99%². This brief uses the Commission's figures. The gap does not change the conclusion: either way, the great majority of notified deals clear without an in-depth investigation.

Two further figures circulate widely but come from law firms, not from the Commission text examined here. According to White & Case, 20% of the cases closed after preliminary review reported no foreign financial contributions at all, because everything fell within the reporting exemptions⁶. The second is a compliance signal. White & Case reports that the share of qualifying procurement procedures attracting an FSR submission rose from 40% to 70% and then "fell back to 45% by late 2025"⁶. McDermott describes the same figure as filing compliance in large tenders falling to 45%⁷. Both firms attribute the figure to the Commission's review. Treat it as a practitioner reading until it is checked against the full review report.

The 45% figure is the most consequential number in the review debate, and also the least secure. If it is right, more than half of qualifying tenders in late 2025 drew no FSR filing at all. That is a gap that falls first on contracting authorities, and it remains a live irregularity risk for any bidder relying on a declaration it should have upgraded to a notification.

Where the Resistance Actually Fell

The Regulation is written to be neutral about origin. It applies to financial contributions from any third country. The enforcement record is not neutral in its incidence.

Concentrations

All three in-depth merger investigations involved acquirers from the Gulf or China. The cases were e&/PPF Telecom, ADNOC/Covestro and JD.com/Ceconomy⁶. Both e&/PPF and ADNOC/Covestro were conditionally approved, ADNOC/Covestro on 14 November 2025⁷. In e&/PPF the commitments included removing a guarantee by amending e&'s articles of association, plus hold-separate obligations⁷. The Commission opened its JD.com investigation on 28 May 2026, with preliminary concerns that "JD.com may have been granted foreign subsidies that could distort the EU internal market", and a decision deadline of 2 October 2026⁴. The outcome of that investigation is outside the evidence base of this brief.

Public procurement

The procurement record is where the gate becomes visible. Of four in-depth investigations, three closed because the companies under investigation withdrew². McDermott identifies them as the Chinese state-owned CRRC in a Bulgarian rolling-stock tender, and the Shanghai Electric and LONGi consortia in a Romanian photovoltaic park, "each exiting once scrutiny began"⁷. The Commission's own text gives the count but not the names².

The fourth case shows the subcontractor rule at work. In the tender for the Lisbon Metro's Violet line, the Commission found that the subcontractor Portugal CRRC Tangshan "may have received foreign subsidies that distorted the procurement procedure". It cleared the Mota-Engil-led consortium's bid on 21 April 2026 only after accepting a commitment "to replace Portugal CRRC with Pojazdy Szynowe PESA Bydgoszcz", a Polish manufacturer⁵. The bid survived. The state-linked supplier did not.

“Three of four in-depth procurement cases ended because the bidder walked away, not because the Commission decided anything.”

Ex officio action

The Commission has opened two ex officio in-depth investigations: Nuctech, in threat-detection equipment, and Goldwind, in wind turbines. Both are ongoing². Both companies are Chinese⁶. Nuctech's challenge to the inspection decision failed at the interim-relief stage, but its main annulment action (Case T-284/24) is still pending. Goldwind has brought its own action against a request for information (Case T-335/26)⁷.

The sharpest procedural step so far concerns cooperation rather than subsidies. On 31 July 2026 the Commission sent Temu a Statement of Grounds. It preliminarily finds that Temu "has infringed its duty to actively cooperate" during an unannounced inspection in Dublin in December 2025⁹. The fine available for obstruction is capped at 1% of turnover. The Commission stresses that the Statement of Grounds "does not prejudge the outcome of the investigation"⁹. It is an allegation, not a finding.

Where the Obligation Does Not Reach

The limits deserve the same attention as the reach.

• Below-threshold transactions. The Commission can ask for prior notification of a concentration below the thresholds under Article 21(5). According to McDermott, it never used that power during the review period, although it made its first procurement call-in in November 2025⁷. White & Case notes that the unused call-in power "continues to create uncertainty for transaction planning"⁶. The power is real but untested for deals.
• Small contributions in tenders. Below EUR 4 million per third country, a bidder files a declaration and not a notification¹.
• Fines. None of the Commission or practitioner sources reviewed for this brief reports a fine under the Regulation. Deterrence so far rests on delay, the award standstill and the reputational cost of an in-depth investigation. Whether a fine follows in Temu's case is undecided.
• Judicial tests. The scope of the Commission's investigative powers is before the General Court in Nuctech and Goldwind⁷. Until those rulings arrive, the outer edge of the ex officio tool is contested.

What Is Proposed, Not Adopted

The review promises targeted adjustments to the procedural framework, not to the Regulation itself. The Commission's text lists, for concentrations, "increasing the turnover notification threshold through a delegated act" and "moderately increasing the reporting thresholds for FFCs, both per individual FFC and per third country"². For procurement it lists simplified forms and clarifications. It plans to publish draft text in autumn 2026 and "aims to adopt" the adjustments in 2027².

None of this is in force. White & Case reports that the review modelled raising the merger threshold to EUR 600 million, which would cut notified cases by 16%⁶. That figure is not in the Commission text examined here and is not a decided threshold. The EUR 250 million procurement threshold is expressly not being moved².

The Judgement

Three conclusions follow, and none of them is urgent.

1. Plan deal and bid timetables around the current thresholds. The EUR 500 million / EUR 50 million merger test and the EUR 250 million / EUR 4 million procurement test are in force. A higher merger threshold is a 2027 proposal. Do not price relief into a transaction now.
2. Treat the subcontractor chain as the procurement exposure. The Lisbon case shows that a bid can carry a state-linked supplier into an in-depth review and be cleared only by replacing that supplier. For any tender at or above EUR 250 million, a consortium should map main subcontractors and suppliers above the 20% share before submission, not after the Commission asks.
3. Stop reading the absence of fines as the absence of enforcement. On the evidence so far, the regime's real effect on state-backed bidders comes from standstill and scrutiny, and those bidders have left. A competitor facing a Chinese or Gulf state-linked rival in a large EU tender should expect the notification process, not a penalty, to do the work.

The enterprise that should act now is the one that assumes a declaration is enough, or that its subcontractors are someone else's filing. Everyone else should file correctly, build the timetable in, and watch the 2027 draft without waiting for it.