The European Parliament this Thursday gave the green light to new rules to control foreign subsidies, such as state subsidies or tax breaks, for companies operating in the European Union (EU), closing a “long-standing regulatory gap”.
At a plenary meeting in Brussels, MEPs gave the green light – with 598 votes in favor, five against and nine abstentions – to a new regulation to ensure that foreign subsidies provided by third countries do not distort the domestic market.
To this end, the new rules will allow the European Commission to investigate subsidies provided by non-EU public authorities to companies operating in the EU and be able to act if subsidies are found to jeopardize competitive practices.
“The regulation fills a longstanding regulatory gap as no regime currently regulates support provided by non-EU countries while EU countries are bound by strict state aid rules,” the European Assembly justified in a press note.
At stake is support from third countries to companies operating in the EU, such as zero interest loans, below-cost financing, tax breaks or direct government subsidies, which Brussels wants to control to prevent preferred companies from overtaking European companies. competing in mergers. , procurement procedures or public procurement.
Once approved by Parliament, the Council is to formally adopt the new rules on 28 November, with the regulation coming into force 20 days after it is published in the Official Journal of the EU.
It is envisaged that from the moment this agreement comes into force, companies will have to inform the European Commission about planned mergers and acquisitions if one of the parties involved has a turnover in the EU of at least 500 million euros and there is a foreign financial contribution. at least 50 million euros.
The Community Executive will also investigate open tenders if the value in question is at least €250 million.
The EU is one of the largest trading blocs in the world, accounting for 16 percent of global trade, and received €117 billion in foreign direct investment in 2021.
The new rules come after suspicions that in recent years foreign subsidies have facilitated the acquisition of EU companies, influenced investment decisions or distorted trade in services, disrupting European competition practices.