European Commission examining EU curbs on state-backed foreign companies

European Commissioner for Competition Margrethe Vestager . EPA-EFE/Philip Davali

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Brussels’ competition chief is examining ways of curbing unfair competition from foreign state-owned enterprises, as EU member states urge closer scrutiny of Chinese investment on the continent.

Margrethe Vestager, the competition commissioner, said some foreign companies were able to use government backing to gain an advantage when acquiring European rivals. She said the commission was looking at possible responses, including proposals for sweeping new powers submitted by the Dutch government.

EU politicians are demanding responses to an aggressive push by Chinese state-supported companies to snap up European assets. Chinese investment in the EU peaked at €37.2bn in 2016, according to figures from the Rhodium Group.

 

Under the Dutch plan, the commission would take on new powers to conduct investigations into a company’s conduct if it thought the business was engaging in “distortionary” behaviour thanks to government subsidies, or if it were deemed to be making excessive profits thanks to a dominant market position in its own country. The commission could respond by forcing the foreign company to be more transparent in its book-keeping, or by prohibiting certain behaviour — such as charging artificially low prices in the EU or pursuing takeovers that are not genuinely profitable.

 

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