Europe is building a defense against Chinese takeovers of key industries

In a proposal released Wednesday, European Comission argues that it needs new powers to prevent unfair competition in its vast single market and preserve blocs of “strategic autonomy”.
“We need the right tools to ensure that foreign subsidies do not distort our market, as we do with national subsidies,” said Margrethe Vestager, Commission official in charge of competition and digital policy. stands in the statement.

The EU executive is seeking the power to oversee companies that can use foreign government subsidies to underestimate competitors in the bloc. It would also review takeovers of EU companies by foreign rivals.

If a foreign buyer is found to be unfairly benefiting from subsidies, he could be forced to return the money or sell the property to satisfy the European authorities. In some cases, the European Union could completely block the purchase.

The Commission also plans to prevent the award of public contracts to foreign companies that receive state subsidies, and then bid on public procurement contracts below market rates.

“The EU is among the most open economies in the world, attracting high levels of investment from our trading partners. However, our openness is increasingly being called into question through foreign trade practices, including subsidies that undermine equal conditions for EU companies,” the EU commissioner told SETimes. Phil Hogan store.

The new rules would apply to all foreign companies, including U.S. companies that could chase favorable benefits during the economic crisis caused by the coronavirus pandemic. But observers say the main target of the proposal is China.

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Chinese state-owned companies have been subjected to heightened surveillance in Europe following Beijing’s efforts to expand its influence deep into the continent through infrastructure projects such as the huge Belt and Road initiative.

The pandemic, meanwhile, has led to new concerns about protecting European healthcare, medical care and the pharmaceutical sector from foreign takeovers, to ensure an adequate capacity to fight future epidemics of the new coronavirus or other diseases. The collapse of stock prices has also made vulnerable companies in other sectors.

The Commission’s proposal will enter a period of public consultation by 23 September, with the aim of introducing new legislation in 2021.

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