The European Union’s executive committee today announced a new law to prevent government-subsidized foreign companies from merging and competing unfairly in the EU, in a move that appears to be intended to prevent China from doing so.
The European Commission today proposed a new regulation to address the competition problems of foreign companies receiving government subsidies, in the hope that by promoting fair competition, it will provide the right conditions for European industries to flourish.
Margrethe Vestager, the EU executive committee member in charge of competition, said Europe is a big country open to investment, but openness needs to be fair. She gave the example that when you open your own home to guests, you want them to be as careful with their furniture and belongings as you are with your own. And that’s the case with Europe’s single market.
The EU wants every company operating in Europe, no matter where it comes from, to comply with the protection of fair competition without distorting the market, and today’s new law is to address the distorting subsidies provided by non-EU countries, Vestager said. A good level playing field is particularly important to support the recovery of the EU economy.
EU Executive Commissioner for Industry and Services Breton (Thierry Breton) also said that the European single market is attractive to foreign investors and companies. But openness to the world is only effective if everyone plays by the rules.
Breton further said that the EU is ensuring that all companies compete on an equal footing and that no one can undermine the level playing field and Europe’s competitiveness through distorted foreign subsidies. This will enhance Europe’s ability to resist.
Under new EU regulations, companies that receive foreign subsidies will need to obtain EU approval before making large mergers in Europe. Companies must indicate which subsidies they receive and cannot take public tenders without the EU’s consent.
In addition, the EU will further have the power to investigate any company that receives foreign subsidies that undermine fair competition in Europe.
Although the EU text does not name China, according to the German “Süddeutsche Zeitung” (Süddeutsche Zeitung) recently reported that the EU Executive Committee proposed legislation to prevent foreign companies receiving government subsidies from merging with and acquiring EU companies or participating in EU public tenders, apparently for Chinese companies.
The newspaper pointed out that in recent years, more and more EU countries are worried about Chinese companies using generous government subsidies to merge and acquire cutting-edge technologies in Europe and fight against European competitors under official leadership, the most famous example being the 2016 acquisition of German robotics major Kuka by Chinese appliance maker Midea Group, which raised doubts about technology outflow.
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