Subject matter and scope
1. The purpose of this Regulation is to contribute to the proper functioning of the internal market by establishing a harmonised framework to address distortions caused, directly or indirectly, by foreign subsidies, with a view to ensuring a level playing field. This Regulation lays down rules and procedures for investigating foreign subsidies that distort the internal market and for redressing such distortions. Such distortions can arise with respect to any economic activity, and in particular in concentrations and public procurement procedures.
2. This Regulation addresses foreign subsidies granted to an undertaking, including a public undertaking which is directly or indirectly controlled by the State, engaging in an economic activity in the internal market. Among others, an undertaking acquiring control of or merging with an undertaking established in the Union or an undertaking participating in a public procurement procedure in the Union is considered to be engaging in an economic activity in the internal market.
Definitions
For the purposes of this Regulation, the following definitions apply:
(1)
‘an undertaking’, in the context of public procurement procedures, means ‘economic operator’ as defined in Article 1, point (14) of Directive 2009/81/EC, Article 5, point (2) of Directive 2014/23/EU, Article 2(1), point (10) of Directive 2014/24/EU and Article 2, point (6) of Directive 2014/25/EU;
(2)
‘contract’, in the context of public procurement procedures and unless otherwise specified, means a public contract as defined in Article 2(1), point (5) of Directive 2014/24/EU, ‘contracts’ as defined in Article 1, point (2) of Directive 2009/81/EC and ‘supply, works and service contracts’ as defined in Article 2, point (1) of Directive 2014/25/EU, as well as ‘concessions’ as defined in Article 5, point (1) of Directive 2014/23/EU;
(3)
‘a public procurement procedure’ means:
(a)
any type of award procedure covered by Directive 2014/24/EU for the conclusion of a public contract or Directive 2014/25/EU for the conclusion of a supply, works and service contract;
(b)
a procedure for the award of a works or a service concession covered by Directive 2014/23/EU;
(c)
procedures for awarding contracts falling under Directive 2009/81/EC, unless exempted by Member States on the basis of Article 346 TFEU;
(d)
procedures for the award of contracts referred to in Article 10(4), point (a) of Directive 2014/23/EU, Article 9(1), point (a) of Directive 2014/24/EU or Article 20(1), point (a) of Directive 2014/25/EU;
(4)
‘contracting authority’ in the context of public procurement procedures, means contracting authority as defined in Article 1, point (17) of Directive 2009/81/EC, Article 6 of Directive 2014/23/EU, Article 2(1), point (1) of Directive 2014/24/EU and Article 3 of Directive 2014/25/EU;
(5)
‘contracting entity’ in the context of public procurement procedures, means contracting entity as defined in Article 1, point (17) of Directive 2009/81/EC, Article 7 of Directive 2014/23/EU and Article 4 of Directive 2014/25/EU;
(6)
‘a multi-stage procedure’ means a public procurement procedure in accordance with Articles 28 to 32 of Directive 2014/24/EU and Articles 46 to 52 of Directive 2014/25/EU, either the restricted procedure, a competitive procedure with negotiation, a negotiated procedure without prior publication, a competitive dialogue or an innovation partnership, or a similar procedure according to Directive 2014/23/EU.
Existence of a foreign subsidy
1. For the purposes of this Regulation, a foreign subsidy shall be deemed to exist where a third country provides, directly or indirectly, a financial contribution which confers a benefit on an undertaking engaging in an economic activity in the internal market and which is limited, in law or in fact, to one or more undertakings or industries.
2. For the purposes of this Regulation, a financial contribution shall include, inter alia:
(a)
the transfer of funds or liabilities, such as capital injections, grants, loans, loan guarantees, fiscal incentives, the setting off of operating losses, compensation for financial burdens imposed by public authorities, debt forgiveness, debt to equity swaps or rescheduling;
(b)
the foregoing of revenue that is otherwise due, such as tax exemptions or the granting of special or exclusive rights without adequate remuneration; or
(c)
the provision of goods or services or the purchase of goods or services.
A financial contribution provided by a third country shall include a financial contribution provided by:
(a)
the central government and public authorities at all other levels;
(b)
a foreign public entity whose actions can be attributed to the third country, taking into account elements such as the characteristics of the entity and the legal and economic environment prevailing in the State in which the entity operates, including the government’s role in the economy; or
(c)
a private entity whose actions can be attributed to the third country, taking into account all relevant circumstances.
Distortions in the internal market
1. A distortion in the internal market shall be deemed to exist where a foreign subsidy is liable to improve the competitive position of an undertaking in the internal market and where, in doing so, that foreign subsidy actually or potentially negatively affects competition in the internal market. A distortion in the internal market shall be determined on the basis of indicators, which can include, in particular, the following:
(a)
the amount of the foreign subsidy;
(b)
the nature of the foreign subsidy;
(c)
the situation of the undertaking, including its size and the markets or sectors concerned;
(d)
the level and evolution of economic activity of the undertaking on the internal market;
(e)
the purpose and conditions attached to the foreign subsidy as well as its use on the internal market.
2. Where the total amount of a foreign subsidy to an undertaking does not exceed EUR 4 million over any consecutive period of three years, that foreign subsidy shall be considered unlikely to distort the internal market.
3. Where the total amount of a foreign subsidy to an undertaking does not exceed the amount of de minimis aid as defined in Article 3(2), first subparagraph, of Regulation (EU) No 1407/2013 per third country over any consecutive period of three years, that foreign subsidy shall not be considered to distort the internal market.
4. A foreign subsidy may be considered not to distort the internal market to the extent that it is aimed at making good the damage caused by natural disasters or exceptional occurrences.
Categories of foreign subsidies most likely to distort the internal market
1. A foreign subsidy is most likely to distort the internal market where it falls under one of the following categories:
(a)
a foreign subsidy granted to an ailing undertaking, namely an undertaking which will likely go out of business in the short or medium term in the absence of any subsidy, unless there is a restructuring plan that is capable of leading to the long-term viability of that undertaking and that plan includes a significant own contribution by the undertaking;
(b)
a foreign subsidy in the form of an unlimited guarantee for the debts or liabilities of the undertaking, namely without any limitation as to the amount or the duration of such guarantee;
(c)
an export financing measure that is not in line with the OECD Arrangement on officially supported export credits;
(d)
a foreign subsidy directly facilitating a concentration;
(e)
a foreign subsidy enabling an undertaking to submit an unduly advantageous tender on the basis of which the undertaking could be awarded the relevant contract.
2. An undertaking under investigation shall be granted the possibility to provide relevant information as to whether a foreign subsidy falling under one of the categories set out in paragraph 1 does not distort the internal market in the specific circumstances of the case.
Balancing test
1. The Commission may, on the basis of information received, balance the negative effects of a foreign subsidy in terms of distortion in the internal market, according to Articles 4 and 5 against the positive effects on the development of the relevant subsidised economic activity on the internal market, while considering other positive effects of the foreign subsidy such as the broader positive effects in relation to the relevant policy objectives, in particular those of the Union.
2. The Commission shall take into account the assessment under paragraph 1 when deciding whether to impose redressive measures or to accept commitments, and the nature and level of those redressive measures or commitments.
Commitments and redressive measures
1. The Commission may impose redressive measures in order to remedy the distortion in the internal market actually or potentially caused by a foreign subsidy, unless it has accepted commitments offered by the undertaking under investigation pursuant to paragraph 2.
2. The Commission may accept commitments offered by the undertaking under investigation where such commitments fully and effectively remedy the distortion in the internal market. When accepting such commitments, the Commission shall make them binding on the undertaking under investigation in a decision with commitments in accordance with Article 11(3). The undertaking’s compliance with the commitments agreed upon shall, where appropriate, be monitored.
3. Commitments or redressive measures shall be proportionate and fully and effectively remedy the distortion actually or potentially caused by the foreign subsidy in the internal market.
4. Commitments or redressive measures may consist, inter alia, of the following:
(a)
offering access under fair, reasonable, and non-discriminatory conditions to infrastructure, including research facilities, production capabilities or essential facilities, that were acquired or supported by the foreign subsidies distorting the internal market unless such access is already provided for by Union legislation;
(b)
reducing capacity or market presence, including by means of a temporary restriction on commercial activity;
(c)
refraining from certain investments;
(d)
the licensing on fair, reasonable and non-discriminatory terms of assets acquired or developed with the help of foreign subsidies;
(e)
the publication of results of research and development;
(f)
the divestment of certain assets;
(g)
requiring the undertakings to dissolve the concentration concerned;
(h)
the repayment of the foreign subsidy, including an appropriate interest rate, calculated in accordance with the method set out in Commission Regulation (EC) No 794/2004 ( 20 ) ;
(i)
requiring the undertakings concerned to adapt their governance structure.
5. The Commission shall, where appropriate, impose reporting and transparency requirements, including periodic reporting regarding the implementation of the commitments and redressive measures listed in paragraph 4.
6. Where the undertaking under investigation proposes to repay the foreign subsidy including an appropriate interest rate, the Commission shall accept such repayment as commitment only where it can ascertain that the repayment is transparent, verifiable and effective, while taking into account the risk of circumvention.
Information on future concentrations and public procurement procedures
In decisions adopted pursuant to Articles 11, 25 and 31, and where proportionate and necessary, the undertaking under investigation may be required to inform the Commission, for a limited period of time, of its participation in concentrations or public procurement procedures. That requirement is without prejudice to notification obligations pursuant to Articles 21 and 29.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
