Last week, the EU published the results of its public consultation on the White Paper on levelling the playing field as regards foreign subsidies.
Out of the 150 responses received from EU member states, EU companies and foreign governments (including China and the US), feedback was generally positive and member states are generally in favour of taking legislative action.
Amongst the responses were also warnings that the EU should take great care to avoid any new rules hindering foreign direct investment in the EU and ensure any new rules are aligned with existing legislation, such as the merger regulation, public procurement directives, the Foreign Direct Investment screening regulation and other trade remedies.
The proposed new rules would consist of three modules, as set out in the White Paper:
- Module 1 being a broad catch-all provision that would address distortive foreign subsidies in all market situations;
- Module 2 requiring notification of subsidised acquisitions of EU targets; and
- Module 3 covering public procurement and addressing foreign subsidies in individual public procurement procedures.
The European Commission’s draft of the legislation is expected to be published in Q2 2021.
