Brussels is looking to crack down on non-EU governments such as China and the United States when they grant subsidies of more than €200,000 to companies that operate in Europe’s single market.
The European Commission is next week set to propose two revolutionary new tools to prevent foreign subsidies from distorting competition inside the EU, according to a draft plan obtained by POLITICO.
The Commission is planning to unveil this 57-page ‘White Paper’ on June 17.
According to the draft, any foreign subsidy above €200,000 (over three years) could allow a “supervisory authority” to open an investigation and impose “redressive measures” such as restructuring and fines — a procedure similar to the one Brussels uses to pursue EU countries for unfairly subsidizing their companies.
The document explicitly draws that parallel, arguing that companies outside the EU have enjoyed an unfair advantage by not having to comply with the bloc’s strict state aid rules. Brussels says the new tools would merely close that “regulatory gap.”
While the first tool would allow regulators to review subsidies after an extra-EU country has paid them, Brussels is also proposing a second tool which would seek to move ahead of the curve and require foreign investors to notify acquisitions of more than 35 percent of an EU company to check the transaction is on market terms.
EU regulators would have the right to open “in-depth investigations” if they suspect big subsidies from foreign governments in any acquisition.
“If, at the end of the in-depth investigation, the competent supervisory authority finds that an acquisition is facilitated by foreign subsidies and distorts the internal market,” regulators could impose “commitments” or, as a last resort, prohibit the acquisition.
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