EU Measures Against Foreign Subsidies (cepInput)

According to the White Paper, the EU Commission wants to create three instruments:

• one for correcting distortions of the internal market brought about by foreign subsidies that enable the undertaking to gain a competitive advantage,
• one to prevent distortions in the internal market that might occur if a subsidised company acquires an EU company and
• one to prevent distortions in the internal market caused by subsidised bidders in public tenders.

“In order to avoid imminent legal uncertainty, we argue for a single instrument that covers all foreign subsidies with EU relevance," says cep economist Alessandro Gasparotti, who wrote the study for the Freiburg think tank.

According to Gasparotti, this instrument should be applied analogously to the EU state aid rules. "Among other things, this would allow Brussels to avoid overlaps in the areas of application and thus legal uncertainty," the cep expert emphasises.

Last June, the responsible EU Commissioner Margrethe Vestager had presented a White Paper on levelling the playing field as regards foreign subsidies. According to Vestager, Brussels' aim is to compensate for market-distorting competitive disadvantages for EU companies. In future, competition from third countries is to be better screened for prohibited state aid.

According to the cep, a uniform regulation would limit the number of investigations of possible infringements to a manageable level. "Competitive advantages due to a foreign subsidy should be offset by repayment obligations," demands cep expert Gasparotti.