© Reuters. FILE PHOTO: A European flag is seen outside the EU Commission headquarters in Brussels
By Foo Yun Chee
BRUSSELS (Reuters) – The EU wants to crack down on foreign companies using unfair foreign subsidies to acquire EU firms, according to a European Commission proposal seen by Reuters, as part of a strategy to protect its key industries and the single market.
European Competition Commissioner Margrethe Vestager, who will present the proposal on June 17, had outlined her plan in an interview with Reuters on Tuesday, saying foreign subsidies risk fragmenting the single market and tilting the level playing field.
The EU proposal also targets companies operating in the bloc and benefiting from foreign subsidies to grow market share or underbid European rivals.
Such companies may have to sell assets to address distortions in the EU single market due to their foreign subsidies.
“There is an increasing number of incidences in which foreign subsidies appear to have facilitated the acquisition of EU undertakings, influenced other investment decisions or have distorted the market behaviour of their beneficiaries,” the EU draft said.
It cited the aluminium, steel, semiconductor, shipbuilding and automotive industries as prone to foreign subsidies such as zero-interest loans, unlimited state guarantees, zero-tax agreements or dedicated state funding.
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