The balancing test under the Foreign Subsidies Regulation (FSR) has emerged as one of its most debated features, reflecting tensions between competition enforcement and broader EU policy goals. Initially conceived as the ‘EU interest test’ in the White Paper, its contours remained rather vague until the recent publication of the Draft Guidelines, in July 2025. These Draft Guidelines finally allow a glimpse into better understanding of the balancing test. This paper explores more broadly how the balancing test works and the policy objectives it may pursue. After mapping the legal sources and the FSR’s relationship with broader EU law, a theoretical framework of the balancing test is developed, rooted in FSR broader assessment and in the general principles of EU law. The test’s process and assessment, in particular the order of positive effects it can balanced, are examined. Some procedural points, i.e., the burden of proof and variations across FSR procedures, are discussed as well. Ultimately, the paper assesses how the Commission will use its discretion in conducting the balancing test and its policy implications.
World Competition