Key Takeaway: The EU (and Member States) may be given new, far-reaching powers to tackle the perceived harmful effects of third-country subsidies benefitting businesses operating in the EU. Remedies could be imposed limiting participation in all sectors of the internal market, including prohibiting businesses from making subsidised acquisitions and participating in public procurement in the EU. On 17 June 2020, the European Commission (the “Commission”) published a White Paper on how to respond to third countries giving subsidies to companies active in the EU (“foreign subsidies”). In an effort to level the playing field, the Commission proposes new tools to address what it perceives as unfair competition from foreign players in the EU’s internal market. The Commission considers that existing tools, in the areas of notably trade defence, competition law and public procurement, are insufficient to avoid distortions resulting from foreign subsidies. The proposed new tool box fits within the EU’s new policy of “open strategic autonomy”. It signals a more pro-active approach on the part of the EU in responding to unfair and abusive practices distorting the EU internal market and undermining the level playing field.
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