PublishedJanuary 27, 2022

CCIA hosts event on EU Foreign Subsidies Proposal

Brussels, BELGIUM — The Computer & Communications Industry Association (CCIA Europe) today hosted a webinar looking at the potential impact on the European economy of the proposed EU Regulation on foreign subsidies today. Speakers were:

  • Christophe Hansen, Member of the European Parliament and Rapporteur of the proposal

  • Alexandre Bertuzzi, Case Handler Officer, DG Competition, European Commission

  • Nicole Kar, Partner, Linklaters

  • Benoît Durand, Partner, RBB Economics and author of a recent study on the proposal

The panelists discussed the European Commission’s proposal for a Regulation ‘’on foreign subsidies distorting the internal market’’ introduced in May 2021. The Commission believes that the existing rules in state aid, merger control, antitrust and public procurement do not fully address the distortive effects of foreign subsidies. The new rules would give the Commission broad powers to investigate and address the potentially distortive effects of foreign subsidies in the EU.

MEP and Rapporteur Christophe Hansen said:
“This proposal is, and will be, one of the most important instruments for our trade policy.” “I support the overall aim and design of the proposal.”

’Given that this regulation will undeniably entail administrative burdens for all parties involved we need, nevertheless, to avoid that it becomes bogged down to procedures and turns into a paper tiger.”

“We have to be careful that without adequate resources for implementation this instrument could rapidly lead to excessive administrative burden for the Commission, augment red tape for foreign and European companies and, ultimately, hamper investment in the internal market without actually moving the needle on counteracting distortive foreign subsidies.’’

‘’I see this regulation as the opportunity for the EU to double-down on its commitment to advance multilateral and plurilateral solutions for distortive subsidies.”’

Partner at RBB Economics and author of a recent study on the proposal, Benoît Durand said:
“The European Commission’s proposal creates significant new risks for all firms doing business in the Single Market. The broad approach can be expected to seriously discourage foreign investment in the EU – even if that investment involves no subsidy and results in no distortion – to the detriment of Europe’s economic recovery.”

Partner, Linklaters, Nicole Kar said:
“The measures have potentially wide ranging implications for auction processes, effectively adding an additional process to EU merger review and which will handicap some bidders and create an ‘un-level’ playing field tilted toward PE and European companies.”

“There are wider and longer term impacts too given that EU companies increasingly benefit from various Member States’ authorised aid measures. They could therefore become targets of third country measures aimed at disciplining the effects of EU’s ‘foreign subsidies’ in third countries’ markets.”

“The EU’s trading partners may go further than simple retaliation against the EU to compensate for their eventual losses in trade in services and investments (e.g. raising tariffs or creating barriers to services trade and investment). They may enact similar protection, even ones specifically targeting EU companies. This could become a regulatory race ‘to the bottom’ with spill-over effects world-wide.”

Alexandre Bertuzzi, Case Handler Officer, DG Competition, European Commission said:
“The proposal strikes the right balance between the need to target those foreign subsidies that are most distortive for the internal market, and the need to ensure a streamlined process that will continue to attract foreign investment to the EU. It builds on familiar pre-existing concepts, ensuring a level playing field and predictable regulatory environment for businesses. In particular, notifications of large concentrations will in most cases come on top of other prior notifications which are already required today and have aligned timelines thereby leading to no delays compared to today’s situation.”

CCIA Vice President & Head of office, Christian Borggreen said:
“The proposal seeks to address valid concerns, but we fear that it inadvertently will have the consequence of thwarting international investment that Europe so desperately needs to kickstart its economic recovery. This isn’t the European Commission’s intention, so, hopefully, lawmakers will improve the proposal to make it workable for both European and international businesses.’’

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