EC will be able to block acquisitions of EU companies with state capital

US, WASHINGTON (ORDO NEWS) — The European Commission (EC) will be able to intervene and even block the acquisition of European companies by foreign entrepreneurs with the help of state subsidies in violation of EU competition law.

These and other new powers of the EC, as reported by the Financial Times on Wednesday, are spelled out in the draft White Paper of the community on this issue.

In accordance with the proposals set out in the draft official document, which the British publication was able to familiarize with, the highest executive body of the European Union intends to consider the impact of financial assistance provided by non-EU governments from the point of view of undermining competition in the union.

“There is a growing number of cases where foreign subsidies, as it turned out, contributed to the acquisition of enterprises in the EU,” the authors note.

“The [current] EU policy toolkit does not take into account all possible aspects of the negative impact of foreign subsidies <…>. Therefore, this document outlines new tools to solve these problems and ensure equal conditions in the domestic market,” the project emphasizes.

The measures proposed by the EC provide an opportunity for the competent authorities to identify the source of financial assistance, and if these funds have a negative effect on the domestic market, then in the last resort an acquisition transaction may be prohibited.

As Margrethe Westager, deputy head of the European Commission, told the newspaper earlier, the EC found that “there is a gap [in possibilities] if, for example, a state-owned company buys a European one and can pay whatever it wants.” “We are trying to determine what can be done here,” said Westager. She called on EU member states to acquire shares of companies that are in danger of being taken over by foreign entrepreneurs, including from China and the United States.

The European Commission spokesman told the Financial Times that “the EC will prepare a White Paper by mid-2020.” “It will present possible ways to eliminate the negative effects of foreign subsidies in the single market and the rules for foreigners to access public procurement and EU funding,” he added.


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