Legal nature of the mechanism of the EU regulation on foreign subsidies

Abstract

EU Regulation 2022/2560 on foreign sub­sidies distorting the internal market is designed to downgrade the insufficient effectiveness of inter­national trade and economic law instruments in protecting economic competition in the internal market. In particular, distortion of economic competition occurs when participating in public procurement or in concentrations of economic entities that have received foreign subsidies, while strict state aid rules are applied in the EU. That is why Regulation 2022/2560 applies approaches inherent in the regulation of state aid to economic entities, taking into account the specifics of foreign subsidies. The article is devoted to proving just this statement, which was made through a detailed comparative analysis of the key provisions of Regulation 2022/2560 and the EU acquis in the field of state aid. The analysis is strengthened by highlighting the relation­ship between the objectives pursued by the Regu­lation and state aid law. Particular attention was paid to the procedure and approaches of the European Commission for assessing the distortive effect of foreign investments and their positive impact on the development of a certain sector of the economy. The empirical basis is presented so far by the only published decision of the European Commission in the case of assessing the concent­ration of Emirates Telecommunications Group Com­pany PJSC and PPF Telecom Group B.V. The study substantiates the conclusion about the complex legal nature of Regulation 2022/2560, which combines the approaches of state aid law and foreign trade policy instruments. Despite certain parallels with state aid legislation, Regulation 2022/2560 demonstrates signi­ficant differences in its provisions, which complicate its consistency with competition law in force in the EU and create additional challenges for harmoni­zing control over foreign subsidies.