Margrethe Vestager – Photo © European Union 2020
(BRUSSELS) – The EU Commission adopted Wednesday a White Paper dealing with distortive effects of foreign subsidies in the Single Market, in a bid to defend European companies from foreign state-subsidised takeovers.
The Commission now seeks views and input from stakeholders on the options set out in the White Paper. The public consultation, which will be open until 23 September 2020, will help the Commission to prepare for appropriate legislative proposals in this area.
“Europe’s economy is open and closely interlinked to the rest of the world,” said the EC’s executive vice-president in charge of competition policy Margrethe Vestager: “If this is to remain a strength, we must stay vigilant. That is why we need the right tools to ensure that foreign subsidies do not distort our market, just as we do with national subsidies.”
EU competition rules, trade defence instruments and public procurement rules are seen as playing an important role in ensuring fair conditions for companies in the Single Market.
Subsidies by the Member States have always been subject to EU state aid rules to avoid distortions.
But the Commission is concerned that subsidies granted by non-EU governments to companies in the EU appear to have an increasing negative impact on competition in the Single Market, but that these fall outside EU state aid control.
It notes a growing number of instances in which foreign subsidies seem to have facilitated the acquisition of EU companies or distorted the investment decisions, market operations or pricing policies of their beneficiaries, or distorted bidding in public procurement, to the detriment of non-subsidised companies.
It also stresses that existing trade defence rules relate only to exports of goods from third countries and thus do not address all distortions caused by foreign subsidies granted by non-EU countries.
Where foreign subsidies take the form of financial flows facilitating acquisitions of EU companies or where they directly support the operation of a company in the EU, or facilitate bidding in a public procurement procedure, there appears to be a regulatory gap.
The White Paper therefore proposes solutions and calls for new tools to address this regulatory gap. In this context, it puts forward several approaches.
The first three options (so-called “Modules”) aim at addressing the distortive effects caused by foreign subsidies (i) in the Single market generally (Module 1), (ii) in acquisitions of EU companies (Module 2) and (iii) during EU public procurement procedures (Module 3).
These Modules may be complementary to each other, rather than alternatives. The White Paper also sets out a general approach to foreign subsidies in the context of EU funding.
WHITE PAPER on levelling the playing field as regards foreign subsidies COM(2020) 253 final
