Antitrust Bites ' Newsletter May 2021

• Published date: 23 October 2021
• Subject Matter: nti-trust/Competition Law, Antitrust, EU Competition
• Law Firm: DLA Piper
• Author: Mr Alessandro Boso Caretta, Domenico Gullo, Matteo Bozzo, Massimo D'Andrea, Bice Di Sano and Giulia Zammataro

Commission proposes new Regulation on the control of foreign subsidies in the single market

On May 5, the European Commission presented a proposal for Regulation on foreign subsidies distorting the single market aimed at addressing potential distortive effects caused in the single market by subsidies granted by non-EU governments which, unlike subsidies granted by Member States, are not subject to any scrutiny.

The proposal for a Regulation provides for the introduction of three instruments aimed at controlling foreign subsidies:

• An obligation to notify the Commission of concentrations in which
  • the acquired undertaking or at least one of the merging undertakings is established in the Union and generates an aggregate turnover in the Union of at least EUR500 million; and
  • the undertakings concerned received from third countries an aggregate financial contribution in the three years before notification of more than EUR50 million.
• An obligation to notify bids in public procurement by undertakings that have received a financial contribution from a government of a non-EU country in the three years before notification, where the value of the procurement exceeds EUR250 million.
• An ex officio power of the Commission to examine other market situations, such as investments in new sectors or below-threshold mergers and procurements, where subsidies from non-EU countries are suspected.

The Commission, both in exercising its ex officio power and in reviewing notifications, will have to assess whether subsidies from non-EU countries distort the single market on the basis of specific indicators, such as the amount, nature and rationale of the subsidy and the economic situation of the undertaking and markets concerned. Furthermore, the Commission, in assessing the impact of subsidies from non-EU countries, will have to balance the negative effects of a foreign subsidy in terms of distortion on the internal market with positive effects on the development of the relevant economic activity. Only if the negative effects outweigh the positive ones will the Commission have the power to impose redressive measures or accept commitments from the undertakings concerned that remedy the distortion.

Finally, the proposal for a Regulation also grants remedial powers to the Commission, including imposing fines of up to 10% of the total turnover of the undertakings involved in a concentration or in a public contract, if subsidies from non-EU countries have not been notified. The Commission will...