18 May 2021 EU proposes foreign subsidy control to match internal state aid regime
While state aid from EU member states is scrutinised on its compatibility with the internal market, there is no corresponding review framework for financial support provided by non-EU states to undertakings that are active in the EU. This can cause certain undertakings to receive foreign subsidies from third countries while others may be prohibited from getting financial aid from EU member states. Foreign subsidies could, for example, allow undertakings to offer lower sales prices in the EU or outbid competitors in M&A transactions. The European Commission has responded with a proposal to level the playing field. The proposal contains a standstill obligation, meaning companies which received foreign subsidies will have to notify the Commission and await clearance before bidding in an M&A deal. Contracting authorities that encounter participants which received foreign subsidies in their public procurements must also notify. Financial thresholds have been set for both types of notification procedures. However, even where cases fall below the threshold, they might still attract scrutiny if the Commission believes their potential impact in the EU so merits.
20 March 2020 Coronavirus and competition
law - state aid, merger
control, crisis cartels and
Competition law has an important role to play in assessing the legitimacy of economic actions taken by EU member states and businesses in dealing with the impact of the coronavirus. National measures to mitigate economic harm may constitute state aid, which has to be approved by the Commission. The Commission has adopted a temporary framework to test the compatibility of national measures with EU state aid rules.
M&A deals are also affected as competition authorities are calling on companies not to submit new notifications, while some ongoing reviews have been paused. Stand-still obligations stay in place, but an exemption might be available if the target company is in serious financial difficulty.
Competition authorities are supportive of sector-wide initiatives that are justified in view of the new challenges, such as those in the supermarket and pharmaceutical sectors. But they will remain vigilant in identifying anti-competitive behaviour that can result in price hikes.