The EU is set to protect its companies against foreign takeovers from firms taking advantage of the economic fallout from coronavirus.
The bloc plans to allow governments to take large stakes in weak European companies, even owning them in some cases.
The European Commission has decided to step in due to the unprecedented impact of the coronavirus crisis, which has seen companies’ stocks plunge and firms shut their stores over lockdowns.
Taking stakes in a company should be “measures of last resort” for governments, the Commission said. But it is currently consulting member states over the plans, the BBC reported.
One threat the EU sees is competition from China’s state-owned companies.
And it fears foreign firms may try to snap up EU companies relatively cheaply during the coronavirus crisis to “take control of key technologies, infrastructure, or expertise”.
A Chinese-backed private equity giant is currently bidding to seize control of UK chipmaker Imagination Technologies’ board.
“This in principle falls outside the scope of EU state aid control and can in particular be important for interventions by member states to prevent hostile takeovers of strategic companies by foreign purchasers,” a spokesman for the European Commission said.
“As in any crisis, the industrial and corporate assets are under stress. The resilience of our industries, their capacity to continue to respond to the needs of EU citizens and the preservation of strategic assets and technology, is key,” the spokesman added.
The EU will bolster foreign direct investment screening regulations from October 2020 to toughen scrutiny of foreign takeovers during the coronavirus outbreak.
“The Commission is well aware of concerns that operations involving companies benefiting from third-country subsidies or state support may have distortive effects in the European internal market,”it added.