Distortive foreign subsidies regulation: A level playing-field for the single market

Briefing 23-03-2023

Public financing of enterprises, which has been on the rise globally, can have a distortive effect on competitive markets. In response to this trend, in May 2021 the European Commission published a proposal for a regulation to tackle foreign subsidies with a distortive effect on the EU single market. It would enable the Commission to investigate subsidies granted by non-EU public authorities to companies operating on the single market, and to apply countervailing measures, should these subsidies be found to be distortive. The Commission would have three tools at its disposal: two are notification-based, allowing it to investigate foreign subsidies in companies' mergers and acquisitions, and to investigate the bids in large public procurement procedures involving third-country government support. The acquirer or bidder would have to give ex-ante notification of external financial contribution. The third would enable the Commission to investigate other market situations. The Parliament adopted its position in plenary in May 2022, and trilogue negotiations concluded successfully in June 2022. Parliament approved the agreement in plenary by a large majority on 10 November 2022 and the final act was signed on 14 December 2022. The regulation entered into force on 12 January 2023. Fourth edition. The 'EU Legislation in Progress' briefings are updated at key stages throughout the legislative procedure.