Debate: Protecting European strategic sectors from foreign takeovers in a post-COVID world
Date: WEDNESDAY, 17 JUNE 2020
Speaker: Margrethe Vestager
Language: EN

And I think we all realise that the current geopolitical context, the global economic environment, is probably the most difficult in recent history. Openness to trade and investments and to a rule-based multilateral order, they are all being challenged.  So today, the European Commission has adopted a White Paper, which launches a public consultation on ideas for future rules to make sure that foreign subsidies won’t undermine the level playing field in Europe’s single market.  Right now, as we start to rebuild from the damage that the coronavirus is doing, we need the single market more than ever.  Foreign investment is an important source of jobs and growth and very much welcome in Europe, but when foreign governments give subsidies to support investment and operations in the single market, that can affect our level playing field in several ways. To give you a couple of examples: if businesses are being subsidised that are already in Europe; if businesses are being helped by foreign subsidies to buy European businesses; subsidies can help foreign companies to outbid rivals in public tenders and some subsidised companies can even get access to money from the European budget. In this White Paper, we produce three different modules with three different ways to deal with these situations.  Module 1 is a general market scrutiny instrument to capture all market situations where foreign subsidies would distort the single market. The competence would be shared between Member States and the Commission and if a subsidy is found to distort the single market then redressive measures could be imposed. Or if the subsidy investment or economic activity has a positive impact that outweighs the distortion, the Commission could decide not to pursue it further. And this is what we call the EU interest test. Module 2 specifically addresses distortions caused by foreign subsidies facilitating acquisitions of EU companies.  The Commission would be the competent supervisory authority and a transaction could not be closed whilst the Commission’s review is still pending. Here, commitments might be accepted to allow for the acquisition and also here an EU interest test could be applied. Module 3 addresses the issues that might arise in public procurement and sets out a mechanism where bidders would have to notify any financial contribution received from third countries.  The competent authorities would then assess whether there is a foreign subsidy and whether that has made the procurement procedure unfair. The bidder would be excluded from the procurement process on this basis.  Finally, we also propose to look at access to EU funding in the context of foreign subsidies, both when EU funds are implemented by the Member States and when they’re implemented by the European Commission directly. Obviously, these are complex matters.  So, we are launching a public consultation. It will be open for 14 weeks until 23 September. And we hope to get a wide range of views and suggestions and this obviously is the best possible way of starting this consultation by getting the views of the European Parliament.