From the beginning of 2023, companies from outside the European Union will no longer be able to simply invest in the EU if they are subsidized by their own government. The EU Member States and the European Parliament have agreed in principle on new legislation that will make it difficult, for example, to take over a Belgian company by a state-backed Chinese company.
“Every company is welcome to do business in the EU”, says European Commissioner Margrethe Vestager (Competition). “But everyone active in the internal market should be treated in the same way so that a level playing field is guaranteed.” She points out that European companies have had to deal with strict regulations when it comes to subsidies for sixty years. “But until now we didn’t have the same rules for non-European companies, which meant that with support from their government they had an unfair advantage in the EU.”
“Doing business with countries and companies from outside the EU is good for our economy. Also because our entrepreneurs can then use their products and services worldwide,” says Dutch minister Micky Adriaansens (Economic Affairs and Climate). “But we should no longer be naive when it comes to dependence on (semi-)products, preservation of knowledge and market distortion. With regard to the latter point, the agreement on this EU-wide legislation is really a step towards a fairer playing field. “
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The new legislation should ensure that foreign subsidies do not disrupt the European market.
Foreign state aid
Foreign support for a company comes in a variety of forms, such as interest-free loans, unlimited state guarantees, tax breaks or direct state financing, the committee said. The new legislation should ensure that foreign subsidies do not disrupt the European market.
The EU daily board will have the power to investigate possible foreign state aid in planned takeovers of European companies by non-EU companies, if it exceeds an amount of 500 million euros and the direct or indirect subsidy exceeds 50 million euros. This is also possible for public expenditures of more than 250 million euros, if there is at least 4 million euros in financing by a foreign government. The companies involved are obliged to report these activities in Brussels.
From now on, the committee can also examine subsidies retrospectively in all market situations, including in the case of takeovers and tenders that do not exceed the aforementioned thresholds.
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