On 5 May 2021, the European Commission proposed a Regulation which lays down rules and procedures for investigating foreign subsidies that distort the EU internal market, and with a view to creating a level playing field as between EU and non-EU market actors in the Single Market (the Proposal). Following its White Paper on foreign subsidies in the Single Market published on 17 June 2020, the European Commission proposed this new instrument with the intention of filling a regulatory gap in the existing EU toolbox. The latter already includes State aid disciplines, merger control and antitrust, public procurement and trade defense instruments. However, none of these EU tools aim at dealing with foreign (non-EU) government subsidies provided to foreign service providers who are active in the EU market, or with such subsidies otherwise facilitating acquisitions of EU companies or assets, or aimed at securing a competitive advantage in public contract tender procedures.
The Proposal, which lies at the intersection of competition and trade law, seeks to help implement the updated EU Industrial Strategy. The Industrial Strategy has as its objective promoting a fair and competitive Single Market by ensuring the development of appropriate conditions for European industry to thrive.