The EU "Club" Gets More Exclusive: Closing The Doors On Foreign Subsidies?
Although the EU has strict rules that limit the circumstances in which Member States can subsidize companies in the EU, the rest of the world does not. The European Commission considers this difference unfair because it would distort competition in the EU and global markets.
The European Commission recently released a White Paper that discusses a future framework to address the perceived imbalance. The goal of the proposal is to "level the playing field" with regard to foreign subsidies and ensure competitive neutrality. The framework aims to address distortions caused by companies active in the EU that have received foreign subsidies. It would also review acquisitions of EU companies where foreign subsidies are involved. A new tool would also be created to address distortions where companies benefitting from foreign subsidies compete for EU public tenders. Finally, it also envisages a mechanism to address foreign subsidies giving companies an unfair advantage in obtaining EU grants and funding.
In our analysis of the White Paper, we will assess the different mechanisms put forward by the European Commission, in the context of the EU's existing tools to address subsidies and the ever increasing focus of the EU on foreign subsidies in the recent past.
