Matthew Hall Analyzes Proposed Rule on Foreign Subsidies That Distort EU Market

July 19, 2021

The July 2021 issue of CP Antitrust Chronicle featured an article by McGuireWoods London partner Matthew Hall discussing the European Commission’s recent proposal to regulate foreign subsidies that distort the EU internal market.

“As the Commission sees it, foreign subsidies may give companies an unfair advantage, crowd out non-subsidized companies, harm innovation and damage the quality and choice of goods and services for consumers in the EU,” Hall wrote. The proposal is intended to level the playing field by setting out rules and procedures for investigating such subsidies and redressing any distortions.

“So far as concerns its language and general structure, the Proposal achieves its intended complementarity and coherence with the EU State Aid, merger control and public procurement rules in particular,” he wrote. “However, there are many uncertainties and practical issues arising which are readily apparent even now.”

Noting that the concepts in the proposed rules will be unfamiliar to many non-EU lawyers, he explained and analyzed the most relevant issues, including the definition of a foreign subsidy, the type of foreign subsidy the regulation would target, what the proposed rules would empower the European Commission to do if there is a subsidy, and notification requirements for companies.

If the rule is adopted, companies should expect active enforcement, Hall said. “The Commission expects to initiate between 30-45 ex officio investigations per year and review 60-70 compulsory notifications under the rules concerning acquisitions and public procurement procedures.” He concluded, “Now is a good time for potentially affected companies based outside the EU to consider the implications and start collecting relevant information.”

Back to top