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Wednesday, 17 June 2020 - Brussels Revised edition

26. Protecting European strategic sectors from foreign takeovers in a post-COVID world (debate)
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  Die Präsidentin. – Als nächster Punkt der Tagesordnung folgt die Aussprache über die Erklärungen des Rates und der Kommission zum Schutz strategischer europäischer Sektoren vor ausländischer Übernahme in der Zeit nach COVID (2020/2663(RSP)).

Auch zu dieser Aussprache gibt es keine spontanen Wortmeldungen und keine blauen Karten.


  Nikolina Brnjac, President-in-Office of the Council. – Madam President, the members of the European Council, in their joint statement on 26 March, underlined that the COVID—19 pandemic constitutes an unprecedented challenge for Europe and the whole world, requiring urgent, decisive and comprehensive action at EU, national, regional and local levels. They pledged to do everything that is necessary to protect our citizens and overcome the crisis by preserving our European ways and way of life.

Members of the European Council also welcomed the Commission guidelines on the screening of foreign direct investment and called on the Member States to take all the necessary measures to protect strategic assets and technology from foreign investments that could threaten legitimate public policy objectives. In the words of the leaders, this will contribute to the EU’s strategic autonomy during the crisis and afterwards.

It is clear that the European Union will not get out of this crisis by closing its doors to international trade and investment. Many European companies are fully integrated in the global supply chain and a significant share of our employment is made possible thanks to international trade and investment. Global trade and investment will therefore remain fundamental for Europe’s recovery and growth. The European Union needs to diversify and solidify its global supply chains to ensure the continuous flow of goods and services and to be better prepared for future crises. However, at this time the European Union also needs to be particularly vigilant to ensure that we preserve those assets that are crucial to our security and that are part of the backbone of our economy. This will directly affect our capability to recover fast.

The economic crisis resulting from COVID—19 has weakened many European companies who have seen their stock prices fall. The danger of predatory takeovers by foreign companies, in particular those in state hands or with strong state support, is very real. The EU’s openness to foreign direct investment therefore has to be balanced with adequate tools and protection. EU rules already provide a framework to guarantee the protection of legitimate public objectives and Ministers for the internal market and industry regularly discuss the competitiveness of the EU economy and in particular its industry.

The discussion focused on strengthening the European strategic economic sectors and value chains and, in this context, also the protection from foreign takeovers. Ministers have welcomed the new industrial strategy for Europe that was presented by the Commission in March. They support the action announced by the Commission to reinforce the EU’s strategic digital infrastructures, to develop synergies between civil, defence and space industries, to secure the supply of pharmaceuticals and their ingredients, and to broaden EU access to raw materials, to give just a few examples.

At the informal video conference last Friday, 12 June, Ministers from the internal market and industry also discussed the Commission’s communication on the recovery plan package adopted on 27 May. They welcomed the measures proposed by the Commission to strengthen EU resilience and strategic autonomy across key technologies and value chains, while preserving the benefits of an open economy.

Ministers also welcomed a new European Strategic Investment Facility under InvestEU to support European resilience and investment in strategic industrial chains, notably those linked to the green and the digital transition. The Ministers took note of the Commission’s intention to propose a reinforced foreign direct investment screening mechanism, which would help the EU to protect its strategic assets, infrastructure and technologies from foreign direct investments that could threaten the security of the public order.

The existing FDI screening regulation was already a priority file for the three institutions during the past legislature. This regulation was agreed very swiftly and in a very consensual manner by the co—legislators. Our collective engagement in this dossier has made the EU better able today to face the challenge in front of us. As you know, a significant and increasing number of Member States already have a screening mechanism in place and many others are accelerating the creation of their national contact points. The cooperation and exchange of information among Member States and with the Commission about potential foreign takeovers affecting our security or public order has increased sharply.

The Commission is regularly analysing and reporting on investment trends in an expert group, as foreseen in the regulation. Moreover, the upcoming Commission White Paper on an instrument on foreign subsidies will be a good opportunity to address the issue of state subsidies from third countries that have the potential of further disrupting the level playing field in the EU single market. The examples I have just mentioned show how institutional cooperation has improved the situation on the ground for our companies.

Finally, allow me to reiterate that the Council and the Member States will take all the necessary measures to protect strategic assets and technology from foreign investments that could threaten legitimate public policy objectives.


  Margrethe Vestager, Executive Vice-President of the Commission. – Madam President, Honourable Members, this debate today in the European Parliament is extremely timely, protecting Europe’s strategic sectors from foreign takeovers in a post-Covid world.

And I think we all realise that the current geopolitical context, the global economic environment, is probably the most difficult in recent history. Openness to trade and investments and to a rule-based multilateral order, they are all being challenged.

So today, the European Commission has adopted a White Paper, which launches a public consultation on ideas for future rules to make sure that foreign subsidies won’t undermine the level playing field in Europe’s single market.

Right now, as we start to rebuild from the damage that the coronavirus is doing, we need the single market more than ever.

Foreign investment is an important source of jobs and growth and very much welcome in Europe, but when foreign governments give subsidies to support investment and operations in the single market, that can affect our level playing field in several ways.

To give you a couple of examples: if businesses are being subsidised that are already in Europe; if businesses are being helped by foreign subsidies to buy European businesses; subsidies can help foreign companies to outbid rivals in public tenders and some subsidised companies can even get access to money from the European budget.

In this White Paper, we produce three different modules with three different ways to deal with these situations.

Module 1 is a general market scrutiny instrument to capture all market situations where foreign subsidies would distort the single market.

The competence would be shared between Member States and the Commission and if a subsidy is found to distort the single market then redressive measures could be imposed. Or if the subsidy investment or economic activity has a positive impact that outweighs the distortion, the Commission could decide not to pursue it further. And this is what we call the EU interest test.

Module 2 specifically addresses distortions caused by foreign subsidies facilitating acquisitions of EU companies.

The Commission would be the competent supervisory authority and a transaction could not be closed whilst the Commission’s review is still pending. Here, commitments might be accepted to allow for the acquisition and also here an EU interest test could be applied.

Module 3 addresses the issues that might arise in public procurement and sets out a mechanism where bidders would have to notify any financial contribution received from third countries.

The competent authorities would then assess whether there is a foreign subsidy and whether that has made the procurement procedure unfair. The bidder would be excluded from the procurement process on this basis.

Finally, we also propose to look at access to EU funding in the context of foreign subsidies, both when EU funds are implemented by the Member States and when they’re implemented by the European Commission directly. Obviously, these are complex matters.

So, we are launching a public consultation. It will be open for 14 weeks until 23 September. And we hope to get a wide range of views and suggestions and this obviously is the best possible way of starting this consultation by getting the views of the European Parliament.


  Phil Hogan, Member of the Commission. – Madam President, as my colleague, Executive Vice-President Commissioner Vestager, has said, the debate in the European Parliament this evening is very timely, for the reasons that she has just outlined, but also, we are living in a global public health challenge that is having profound consequences on our economies and on our daily lives. The COVID-19 emergency has exposed our vulnerability in many respects, and one of them is the resilience of our strategic industries in their capacity to respond to the vital needs of the European people.

We all agree that investment, including foreign direct investment (FDI), will play a central role in our economic recovery in each Member State, but foreign direct investment will also contribute to bridging the gap of domestic financing for the EU’s economic recovery and future ambitions, including greening our economy and making it fit for the digital age. In addition, foreign direct investment turbocharges research and innovation. Foreign—owned firms account for a quarter of business in terms of R&D in France, Germany and Spain, between 30% and 50% in Portugal and Sweden, and more than 50% in Austria, Belgium and Ireland.

But foreign investments should not happen at the expense of our own internal security. This is where our FDI Screening Regulation plays a very important role in addressing the concerns when foreign investment may put European security or public order at risk. The Commission is closely following developments in the European Union, and at the end of March, we issued, as the Council President has said, special guidance to Member States on the protection of Europe’s strategic assets, ahead of the full application of the FDI Screening Regulation in October 2020. It reminds Member States of the interdependencies that exist in the European single market. It calls on all of them to seek advice and coordination in cases where foreign investments could, actually or potentially, now or in the future, have an effect on public order or security. Those Member States that have screening mechanisms should take full advantage of that and use them, and those that do not should certainly put them in place as soon as possible.

Europe has a strict and unique system of state aid control and transparency in place, but there is increasing concern that some third countries do not shy away from intervening in our markets with massive amounts of subsidies, and such third—country subsidies will then distort the European Union’s internal market. So investors receiving such subsidies could aim to acquire EU companies and could, thanks to their state financing, outbid other companies, including European companies. As Executive Vice-President Vestager said, the Commission has today adopted a white paper, which launches a very important public consultation on the ideas for future roles to make sure that foreign subsidies don’t undermine the level playing field in Europe’s single market. I look forward to hearing your views.




(Die Aussprache wird unterbrochen)

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