The European Commission proposed rules on Wednesday to prevent companies that benefit from distortive foreign subsidies from buying EU businesses or taking part in public tenders, with a particular eye on fending off unfair competition from China.
“The EU is the most open market in the world. But openness rhymes with fairness. (…) The aim of the proposed measures was to ensure a level playing field,” said the European Union Executive’s President, Ursula von der Leyen in a tweet.
The European Commission’s plan underscores a more protectionist line prompted by a recent surge of foreign takeovers of European companies and fears of a buying spree of firms whose share prices declined during the COVID-19 pandemic.
According to the proposals, the Commission investigation would be triggered if it identifies possible distortive foreign subsidies in takeovers of EU companies with a turnover of 500 million euros ($600.4 million) or more in the bloc or in procurement contracts from 250 million euros and above.
Companies violating the rules could be forced to sell part of their business or be fined up to 10% of their turnover.
The proposed measures will need to be agreed among EU member states and the bloc’s parliament, and both foreign governments and companies are expected to lobby to water them down.
The EU’s antitrust chief, Margrethe Vestager said at a news conference that the rules would apply to all sectors and were based on the idea that “Europe is open for business” but inward investments must be fair and transparent.