Foreign investment: EU launches guidelines to combat unfair competition

Brussels – The word “China” is never mentioned, but when the Commissioner for Industrial Strategy, Stéphane Séjourné, announces new measures to counter “the distorting effects of foreign investment in public procurement”, the People’s Republic inevitably appears in the background. After all, the exclusion of Beijing-based companies from the European medical device market has demonstrated the need for action on an issue that, today (9 January), the EU Commission has decided to address by revising the rules on third-country participation in the twelve-star economy. 

The objective is the one stated by Séjourné, who reiterates it in other terms: “Our objective is to ensure that European companies compete on a level playing field.” In this regard, the guidelines for the foreign investment regulation clarify how to proceed in assessing market distortions. 

Specifically, once it has been established that a company operating in the internal market has benefited from a foreign subsidy, the Commission will assess whether there is a distortion in two stages. First, the Commission will examine whether the foreign subsidy strengthens the company’s competitive position in the EU. Second, the Commission will assess the impact on competition by analysing whether the subsidy is likely to alter the company’s competitive behaviour and market dynamics to the detriment of other operators. For subsidies not intended for economic activities in the EU, a more detailed analysis will be conducted to assess the risk that they may be used for such purposes.

 https://www.eunews.it/en/2025/11/06/european-commission-opens-probe-into-chinese-unfair-competition-in-lisbon-metro-tender/ 

In public procurement, if an economic operator participates in a procedure in the internal market and the Commission is informed that a foreign subsidy may have influenced the tender terms, it will assess whether there has been a distortion. First, the Commission will assess whether the economic operator may have used the foreign subsidy in determining the terms of its tender. If so, the Commission will assess whether the tender submitted is unduly advantageous by comparing it with the other tenders submitted in the procedure and with the contracting authority’s estimates. If the tender is unduly advantageous, the Commission will assess whether the advantage derives to an appreciable extent from the foreign subsidy or from other justifiable factors. 

In its assessments, the European Commission will only take into account the specific positive effects of the foreign subsidy in question. The balance will take into account the severity of the distortion and the possibility of achieving positive effects without the distortion. If the positive effects outweigh the negative effects, the Commission will not raise any objections. If not, the Commission may accept commitments or impose corrective measures.

 “By aligning EU procurement procedures with the principles of merit and fairness, we are protecting the Single Market and ensuring that public investment continues to support industrial leadership and competitiveness across Europe,” Séjourné assures us.