New EU Foreign Subsidy Regulation in action – EC carries out dawn raids of Chines companies in EU

Today (24 April 2024) European Commission launched two dawn raids in offices of Chinese companies in Poland and the Netherlands based on the new EU Regulation on Foreign Subsidies. According to available information, the authority seized computers and documents to secure evidence of excessive state aid obtained in China.

The regulation enables European Commission to carry out broad actions against subsidies granted to companies outside the EU which inflict distortion of competition on the EU market. The Commission may impose a partial or full repayment of such subsidies, as well as conditions on concentration decisions for recipients of such subsidies taking over EU companies (e.g. the obligation to dispose of certain type of activity or to make available subsidised IP on non-discriminatory terms).

It should be noted here that further to this regulation reporting duties are introduced, whereby the companies must notify EC of foreign subsidies in cases of concentrations if the subsidies exceeded EUR 50M and the taken over company or joint venture generates turnover exceeding EUR 500M in EU, as well as in public procurements exceeding EUR 250M (in this latter case the non-EU subsidies exceeding EUR 4M per country are subject to reporting).

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