Filling the regulatory gap to address foreign subsidies: The EC’s search for a level playing field within the internal market

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The paper starts from EU legal treatment of foreign subsidies and the anticipated conclusion of filling existent gaps in this area. In section 2, breaches in EU competition law are scrutinized, particularly in the light of the EU merger control regime and articles 101 and 102 of the TFEU. In section 3, the effects of foreign subsidies in the EU internal market are studied from the point of view of state aid rules. Finally, in sections 4 and 5 the new EU FDI-screening Regulation, the White Paper on levelling the playing field as regards foreign subsidies and the proposal of a new EU Regulation to address distortions caused by foreign subsidies in the Single Market are examined. It is concluded that the EU is gradually becoming more proactive and equipped with legal instruments that welcome the effects theory and which will allow the EU to evaluate economic policies followed by third countries, especially related to investments in the EU when associated with foreign subsidies. Here, it remains to be seen how third countries will react to those EU instruments particularly considering the reciprocity principle and possible negative reaction from those countries.

Disclaimer: The publication was made under the general support of the Jean Monnet Chair, awarded by the European Commission to the author.