The European Commission, the executive branch of the European Union, proposed on Wednesday to grant itself expanded regulatory powers that would allow it to intervene in potentially destabilizing takeovers of European companies by foreign state-backed investors.
The continuing fallout of global pandemic lockdowns and frozen supply chains has left many large European corporations in dire financial straits — and vulnerable to acquisitions by investment firms and holding companies looking for a bargain.
By securing the ability to alter or even deny acquisitions involved foreign state-backed firms, the Commission hopes to shield vital industries — such as health care and high tech — from excess foreign influence and the distortionary effects of subsidies. Similar regulatory oversight is already applied to companies backed by governments within the EU, meant to prevent members of the union from undercutting one another.
When pressed by reporters at a press conference for the proposal, Margrethe Vestager, the European Commissioner for Competition, asserted that the body had “no specific country” in mind when considering its options. The subtext was clear, however: this move is intended to curb the growth of Chinese influence in Europe’s economy.
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