On 5 May 2021, the European Commission (the Commission) proposed a regulation to tackle foreign subsidies causing distortions in the European Union’s internal market (the Proposal).

The Commission is concerned that subsidies granted by non-EU countries may cause distortions in the internal market and undermine the level playing field within the EU, especially when they are used to finance participation in public procurement tenders or acquisitions of undertakings. According to the Commission, whereas public support granted by EU Member States is subject to State aid rules, the current competition, trade, and public procurement rules do not address distortions caused by foreign subsidies. Therefore, undertakings benefitting from third-party subsidies enjoy a competitive advantage over those that cannot receive the same.

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