Restricting freedom of contract – the EU foreign subsidies regulation and its consequences for public procurement

Abstract

Purpose

The purpose of this paper is to analyze the recently enacted Regulation (EU) 2022/2560 of the European Parliament and of the Council of December 14, 2022, on foreign subsidies distorting the internal market (foreign subsidies regulation [FSR]) and its repercussions on the European Union (EU) public procurement marketplace and corporations from third countries. The purpose of this paper is to analyze the geopolitical and economic backgrounds for the Regulation and its efficiency.

Design/methodology/approach

In this study, the authors used doctrinal and analytical legal methodologies, meticulously examining pertinent EU law sources. The authors systematically collated and scrutinized applicable literature and legislative process materials to discern the essence and substance of the norms enshrined in the law. In this study, the authors also applied a socio-legal methodology when focusing on the economic and geopolitical context surrounding the adoption of the FSR. The contextual analysis traces the evolution of changes in international cooperation and recent political shifts.

Findings

Implementing the FSR should pave the way for a more equitable competitive landscape within the EU public procurement market, bolstering EU values. However, its potential to prolong public procurement procedures and create uncertainties regarding their outcomes could pose challenges, possibly affecting the effectiveness of public procurement regulations. Only time will reveal the extent of the EU’s interventionist approach and how necessary adjustments must be made to align with market demands.

Social implications

This study highlights socially relevant aspects of the implementation of EU policies – European New Green Deal and European Industrial Policy in the context of public procurement. The analysis contained in this study concerns issues directly related to meeting the collective needs of the citizens.

Originality/value

To the best of the authors’ knowledge, this study is the first in-depth analysis of the solutions contained in the FSR in terms of geopolitical and economic aspects. Furthermore, there have been no studies so far, which have analyzed the FSR in detail from the point of view of its effectiveness. The effectiveness concept contained in this study is the authors’ own solution.

Citation

Kania, M. and Andhov, M. (2024), "Restricting freedom of contract – the EU foreign subsidies regulation and its consequences for public procurement", Journal of Public Procurement, Vol. 24 No. 1, pp. 21-41. https://doi.org/10.1108/JOPP-07-2023-0053