EU Regulation Go into Effect, Curbing “Dishonest” Foreign Subsidies

Starting today, the European Union activates the “shield” against unfair competition. The regulation of foreign subsidies contains rules directed at countering distorting foreign subsidies in the domestic market. This refers to investments or bloated acquisitions with funding from foreign countries. Supervision begins on July 12, and starting October 12, notification of concentrations and state orders above certain thresholds will become mandatory.

This concerns turnovers of 500 million euros in the EU with foreign public support of at least 50 million euros over the last 3 years. In case of public contracts, the threshold will concern orders of at least 250 million euros with foreign public support of at least 4 million euros in the previous 3 years.

Such a regulation is part of a set of tools being implemented by the EU to counter investment practices that are considered unfair by foreign companies (some call it an anti-China shield).

In practice, the regulation of foreign subsidies is just an extension of the antitrust practices already in place in the domestic market in order to try to counter state aid in particular.