EU to making it harder for Chinese state-backed firms to buy stakes in European companies

By Amwal Al Ghad English On Jun 17, 2020

Executive Vice President of the European Commission for a Europe Fit for the Digital Age Margrethe Vestager (L) and the EU Commissioner for Internal Market Thierry Breton (R) are talking to media in the Berlaymont, the EU Commission headquarter on February 19, 2020 in Brussels, Belgium.

EU proposes new rules to tackle takeovers from state-backed firms like those in China as concerns grow over unfair competition.

The European Commission, the executive arm of the EU, proposed Wednesday to have a bigger say when foreign state-backed firms buy stakes in European companies to a point where it could prohibit the merger — if its deemed that it could create market distortions.

The proposal kicks off a discussion period that lasts until September, but it comes after Germany and France pushed for changes at the top level. In a letter sent to the EU in February, both governments said it should revise its guidelines regarding mergers, as European firms were increasingly fighting against players that received “substantial state support.”

State influence has often been discussed in the EU, but the ongoing pandemic has made the issue even more pressing as many businesses are struggling for cash.