The European Commission recently conducted unannounced inspections at a security equipment company, marking the first instance of the use of new powers under the Foreign Subsidies Regulation. This regulation, which came into effect in July 2023, aims to address distortions caused by foreign subsidies and ensure fair competition among companies operating in the EU market. While the Commission has launched several investigations under this regulation, such as those into Chinese solar panel manufacturers and wind turbine producers, this is the first time it has acknowledged carrying out inspections at a company’s premises.
The Commission stated that it had reason to believe that the company under inspection may have received foreign subsidies that could potentially distort the internal market. The raids were conducted by Commission officials, in collaboration with national authorities in various member states. However, the Commission has not disclosed the identity of the company or the countries involved as the investigation is in its initial stages. It remains unclear whether the raid was prompted by a complaint or initiated by the Commission independently. There is no fixed timeline for collecting evidence to determine if the company received distorting foreign subsidies, with the possibility of an in-depth investigation being opened if sufficient evidence is found.
It is important to note that the initiation of inspections does not automatically imply that the company in question has indeed received distorting foreign subsidies. The outcome of the investigation is not predetermined by the fact of the inspections being carried out. The Commission emphasized that the purpose of the inspections is to gather evidence and information to determine the presence of any potential distortive subsidies. If evidence of such subsidies is found, an in-depth investigation will be launched by the Commission. However, if no substantiating evidence is uncovered, the identity of the company and the member states involved will be made public.
The Foreign Subsidies Regulation seeks to level the playing field for companies operating in the EU market by addressing the distortions caused by foreign subsidies. By utilizing new powers granted under this regulation, the European Commission is taking proactive steps to ensure fair competition and prevent any unfair advantages for companies receiving distorting foreign subsidies. This marks a significant development in EU regulations, indicating a stronger stance on maintaining market integrity and protecting the interests of companies operating within the EU.
The use of unannounced inspections by the European Commission signifies its commitment to enforcing the Foreign Subsidies Regulation and addressing potential distortions in the internal market. By conducting these raids at the premises of a security equipment company, the Commission is sending a clear message that it will not tolerate unfair practices that could undermine competition or harm companies operating within the EU. The investigations being conducted in collaboration with national authorities further demonstrate the importance of cross-border cooperation in tackling global issues such as foreign subsidies.
While the company under inspection has not been named, the Commission’s actions highlight its dedication to upholding fair competition and preventing distortions in the EU market. The next steps in the investigation process will involve the gathering of evidence to determine the presence of foreign subsidies that could potentially distort the market. If these subsidies are confirmed, the Commission will initiate an in-depth investigation to address the issue. By taking a proactive approach to enforcing the Foreign Subsidies Regulation, the European Commission is working to protect the interests of companies operating within the EU and promote a level playing field for all participants in the market.
