European Union (EU) by foreign investors from third countries such as China as of July 12, 2023, when six months have passed since the entry into force of the new regulation.
The measure is mainly planned to stop China’s entry into strategic sectors in the EU and its novelties are related to the creation of two prior notification instruments for large-scale mergers and for offers in relevant public investigation procedures. In addition, this regulation gives Brussels the power to investigate financial contributions provided by third countries to companies that carry out an economic activity in the EU and to correct, if necessary, their distorting effects.
In this way, companies must notify the community services of mergers and acquisitions when one of the parties involved has a turnover in the EU of at least 500 million euros and there is a foreign financial contribution of at least 50 million euros. . In the case of offers in public procurement procedures, the threshold is set at at least 250 million euros. If a company fails to comply with the notification rules, the Commission may impose fines and review the transaction as if it had been notified.
In addition, except for specific exceptions, the Community Executive will be empowered to investigate foreign subsidies granted up to five years before the entry into force of the regulation when said subsidies distort the Internal Market after the entry into force of the new regulation. Thus, as is already the case with the rules on State aid within the EU, if Brussels determines the existence of a foreign subsidy and that it distorts competition, it carries out a test to assess the positive and negative effects of a foreign subsidy.
If the negative effects are greater than the positive ones, the Commission may impose corrective measures, both structural and non-structural, and the reimbursement of the foreign subsidy, or to accept commitments from the affected companies in order to correct the distortion caused by the subsidy. foreign. In the coming weeks, Brussels will present a draft implementing regulation that will clarify the applicable rules and procedures, including notification forms for mergers and public procurement procedures, calculation of deadlines, access to information.
