The European Commission is to take unprecedented action against non-EU governments that provide subsidies of more than €200,000 to companies working within Europe’s single market, with a particularly strong eye on China and the United States, according to POLITICO.
The news site says that it has obtained a 57-page “draft plan” drawn up by the European Commission that shows the body is planning to create new powers that would bolster Brussels’ ability to combat overseas companies unfairly competing in the EU marketplace.
POLITICO says the draft makes clear that any “any foreign subsidiary above €200,000” could trigger a “supervisory authority” that would investigate and implement “redressive measures” - potentially including hefty fines.
The EU already has a similar mechanism that applies to member states, and the draft document makes clear that EU leaders have been frustrated by foreign companies' immunity from the bloc’s strict state aid regulations, and Brussels sees the new tools as a way to shut the door on the “regulatory gap.”
The new tools are said to have two main functions.
Firstly, they would give a mandate to EU business regulators to review subsidies to foreign businesses from non-EU governments. Secondly, the proposed measures would call upon foreign investors to notify the EU on acquisitions that exceed 35% of an EU company in order to ensure that the transaction is in line with the bloc’s market rules.
According to POLITICO, “EU regulators would have the right to open ‘in-depth investigations’ if they suspect big subsidies from foreign governments.”
The EU’s draft plan reportedly says that, “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” then the EU could move rapidly to impose commitments or go so far as to prevent the acquisition from taking place at all.
The news comes as Europe looks to push back on China’s growing influence in particular. Last week, it was announced that a coalition of lawmakers from eight countries - many of them from within the EU - had formed the Inter-Parliamentary Alliance on China. However, there is also growing concern over the economic activity of the Trump Administration, which has repeatedly threatened to increase tariffs on EU goods entering the US, with a particular focus on the German automobile industry.