The EU executive body is seeking the power to examine companies that can use subsidies from foreign governments to defeat competitors in the block. It will also examine the acquisition of EU companies by foreign competitors.
If a foreign buyer is found to be unfairly benefiting from subsidies, he may have to repay money or sell assets to meet European authorities. In some cases, the European Union can prevent purchases altogether.
The Commission also plans to award public contracts to foreign companies that receive government subsidies and then bid on public procurement contracts below market prices.
“The EU is among the most open economies in the world, attracting a high level of investment from our trading partners. However, our companies are increasingly challenged by our foreign trade practices, including subsidies that disrupt the level playing field for companies in the EU, “EU trade commissioner Phil Hogan.
The new rules will apply to all foreign companies, including US companies, who can negotiate during the economic crisis caused by the coronavirus pandemic. However, observers say the main target of the proposal is China.
China’s state-owned companies have been subjected to increased scrutiny in Europe, after Beijing’s efforts to expand its influence to the depths of the continent through infrastructure projects such as the huge Belt and Road Initiative.
Meanwhile, the pandemic has raised new concerns about protecting Europe’s healthcare, medical and pharmaceutical industries from foreign acquisitions, to provide sufficient capacity to face future outbreaks of new coronavirus or other diseases. The shrinking stock prices also made companies in other industries vulnerable.
The Commission’s proposal will enter the process of public participation by 23 September to introduce new legislation in 2021.
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