Philip Blenkinsop

BRUSSELS (Reuters), – Monday saw the approval of EU legislators to restrict acquisitions and bids for public contract by subventioned foreign companies. It is all part of a push to create an economic level playing field and avoid being influenced by Chinese and other multinationals.

A tighter version was approved unanimously by the European Parliament’s Trade Committee. This law, which was introduced May 2021 by the European Commission, allows it to probe the role foreign subsidies play in the EU Single Market.

Other defensive measures will be added to the new law, including those intended to persuade trade partners to provide reciprocal access to their market and discourage economic coercion.

Christophe Hansen was the EU lawmaker who oversees the new law. He said Europe must be open, but not naive, and that foreign companies should have the same scrutiny on EU subsidy programs as their counterparts.

The EU executive Commission is responsible for overseeing competition policy within the 27-nation European Union. It will be able insist on certain commitments (such as divestment assets) and to even block a takeover of award of a public contract.

According to the EU executive Commission, an acquirer must notify it if the EU target firm has a turnover less than 500 million euro ($536.2 million), and foreign subsidies exceed 50 million euros.

A bidder for a contract public receiving foreign subsidy would be required to inform the Commission. The Commission could also conduct its own investigation into transactions of a smaller size.

EU legislators want to lower the notification thresholds for acquisitions and public contracts exceeding 200 million euros.

The Commission also wants to investigate subcontractors and suppliers who receive foreign subsidies or contribute 20% of the economic worth of public contracts. Commission proposed that a limit of 30% be set.

The European Parliament needs to still approve the law with EU government, which some want to play a greater role.

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