News item | 30-06-2022 | 21:00
From the beginning of 2023, Dutch and other EU entrepreneurs will be better protected against unfair competition from companies that benefit from subsidies from non-EU countries. There will be a reporting obligation for and supervision of larger acquisitions and tenders on the European market. If an investigation shows that there is an actual distortion of competition, the European Commission can take measures such as sanctions or decide that the company concerned must reverse this distortion of competition.
EU Member States and the European Parliament today reached a political agreement on the introduction of this Regulation on Foreign Subsidies (RFS). The Netherlands took the initiative in Europe for this legislation in 2019, because an uneven playing field is an increasing problem and thus hinders European entrepreneurs in their income and growth opportunities. The new regulations aim to tackle improper government support, both financially and in the form of goods or services.
Minister Micky Adriaansens (Economic Affairs and Climate): “Doing business with countries and companies from outside the EU is good for our economy. Also because our entrepreneurs can then go worldwide with their products and services. But we should no longer be naive when it comes to dependence on (semi-)products, retention of knowledge and market disruption. On that last point, the agreement on this EU-wide legislation is really a step towards a fairer playing field. Companies from within and outside the EU remain welcome on the market, but they must abide by our rules of the game.”
Duty to report and supervision
The final EU Regulation (RFS) contains three elements that form the basis for addressing market distortions. This concerns a notification obligation for subsidies for takeovers where the company to be acquired has a turnover above a certain threshold value and the direct or indirect subsidy amounts to more than 50 million euros. There will also be a reporting obligation for subsidies when tendering for a tender with a high estimated value.
Finally, the European Commission will be empowered to examine subsidies retrospectively in all market situations, including takeovers and tenders that do not exceed the thresholds. There are also fines for not cooperating with such an investigation and providing false information. Investigations can also be made into government aid that has been provided in the past. This is positive, because the disruptive effects of a subsidy are sometimes only visible later. An investigation can also be started if there is a suspicion that the reporting obligation has not been complied with, whether consciously or not.
Uneven playing field due to import of goods
With this new EU regulation, an unlevel playing field in terms of takeovers and procurement can be effectively tackled for the first time. Global rules of the World Trade Organization (WTO) already apply to foreign subsidies on the import of (industrial) goods, such as raw materials or semi-finished products. That is why it is important that these two sets of rules fit together seamlessly. The Netherlands will continue to pay attention to this.