White Paper review on foreign subsidies in the Single Market

Submitted by Tedora Aibu on 19 June 2020

The European Commission has announced the adoption a White Paper to deal with the distortive effects caused by foreign subsidies in the Single Market. The aim of the White Paper review is to level the playing field as regards foreign subsidies in the European Union. The European Commission now seeks views and inputs from all stakeholders on the options set out in the White Paper. The public consultation, which will be open until 23 September 2020, will help the European Commission to prepare the appropriate legislative proposals in this area. The European Union's competition rules, trade defence instruments and public procurement rules play an important role in ensuring fair conditions for companies in the Single Market. Subsidies by Member States have always been subjected to EU State Aid rules to avoid distortions. Subsidies granted by non-EU governments to companies in the EU appear to have an increasing negative impact on competition in the Single Market, but naturally fall outside the EU State Aid control. There is a growing number of instances in which foreign subsidies seem to have facilitated the acquisition of EU companies or distorted the investment decisions, market operations or pricing policies of their beneficiaries, or distorted bidding in public procurement, to the detriment of non-subsidised companies.

Therefore, the White Paper proposes solutions and calls for new tools to address this regulatory gap. In this context, it puts forward several approaches. The first three options aim at addressing the distortive effects caused by foreign subsidies. They are referred to as: 

  1. Module 1: In the Single market generally;
  2. Module 2: Inacquisitions of EU companies; and
  3. Module 3: During EU public procurement procedures.

These Modules may be complementary to each other, rather than alternatives. The White Paper also sets out a general approach to foreign subsidies in the context of EU funding.

To view the full article about the adoption of the White Paper by the European Union, please click here. © European Union, 1995-2020. 

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