Today (17 June) the European Commission adopted a White Paper on the distortive effects caused by foreign subsidies in the Single Market. The Commission now seeks views and input from all stakeholders on the options set out in the White Paper.
The EU’s competition rules, trade defence instruments and public procurement rules play an important role in ensuring fair conditions for companies in the Single Market, the so-called level playing field. Subsidies by EU member states have always been subject to EU state aid rules to avoid distortions. However, subsidies granted by non-EU governments to companies in the EU appear to be having an increasingly negative impact on competition within the Single Market, but fall outside the EU’s state aid controls.
The Commission says that there are a growing number of instances in which foreign subsidies seem to have facilitated the acquisition of EU companies or distorted investment decisions, or public procurement.
The Commission has put forward several approaches to resolving this problem. The first three options aim at addressing the distortive effects of 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.