On 5 May 2021, the European Commission published its proposed Regulation to address potential distortive effects of foreign subsidies in the Internal Market, with the aim of ensuring a level playing field for all market players within the EU. The proposal creates a new instrument to allow the Commission scrutinize subsidies granted by non-EU countries to undertakings active in the EU. Specifically, the Commission will be able to conduct investigations on its own initiative and relevant mergers will have to be notified to the Commission. One crucial question in practice is how the proposed new tools fit into the existing EU legal and regulatory landscape. The tools proposed are capable to suspend and even block large concentrations. They would further give the Commission a large margin of discretion to address distortions in the internal market caused by foreign subsidies in any market situations. As there is a large degree of discretion for the Commission, this may become a very politicized instrument. In sum, the proposal would add considerable legal uncertainty to an already complex regulatory landscape for foreign investors in the EU.
Investment plays a key role in EU-China trade relations. Since the Lisbon Treaty came into effect on December 1, 2009, the EU’s common commercial policy has extended to investment. Accordingly, the EU has exclusive compe- tence covering investment policy and its negotiation with third countries. Not to mention, the EU has become the main trading partner of China since 2011 because it identifies China as a strategic partner, as well as a targeting country with which to negotiate a high-standard bilateral investment agree..
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