New Tendencies in Public Procurement – a way towards levelling playing field or a glimpse of protectionism?

 In News & Insights

Our attorney Tomislav Sadrić participated on a conference “COMPETITION LAW (IN PANDEMIC TIMES): CHALLENGES AND REFORMS“, with his presentation on the topic „New Tendencies in Public Procurement – a way towards levelling playing field or a glimpse of protectionism?“. Conference was organised by Jean Monnet Module for Competition Law of Faculty of Law and Faculty of Economics in Osijek in cooperation with the Croatian Association for Competition Law and Policy.


On 8 May 2021, less than a year after the White paper on levelling the playing field as regards foreign subsidies was released, the EU Commission published the Proposal for a Regulation on foreign subsidies distorting the internal market. The Proposal is intended as an EU response to the market distortions, caused by foreign subsidies used by companies with third country background, in order to achieve advantageous position on the internal market over their EU-based competitors.


The Proposal is designed to tackle foreign subsidies generally, and in particular in the fields of concentrations and public procurement. According to the Proposal, a foreign subsidy shall be deemed to exist where a third country provides a financial contribution which confers a benefit to an undertaking engaging in an economic activity in the internal market and which is limited, in law or in fact, to an individual undertaking or industry or to several undertakings or industries.


In case the estimated value of individual procurement is equal or greater of EUR 250 million, the Proposal envisages obligatory notifications of foreign subsidies for all economic operators submitting a tender. The Commission may request the notification even if the estimated value of the procurement is under the threshold if it suspects that an undertaking may have benefitted from foreign subsidies.


Only foreign subsidies granted during the three years prior to the notification shall be taken into account. In its notification, an economic operator should provide information on subsidies received by itself, but also on subsidies received by its main subcontractors and main suppliers. Notifications are to be submitted to a contracting authority conducting a procurement, and without delay forwarded to the Commission. The Commission shall initiate a preliminary review procedure, followed with an in-depth investigation if the results of a preliminary review show sufficient indications of the existence of a foreign subsidy distorting the internal market. If initiated, an in-depth investigation should result in the Commission adopting one of the following decisions:


  1. a no objection decision, if it finds that the preliminary assessment as set out in its decision to initiate the in-depth investigation is not confirmed, or if a distortion on the internal market is outweighed by positive effects;
  2. a decision with commitments, if it finds that a foreign subsidy distorts the internal market and the undertaking concerned offers commitments that fully and effectively remove the distortion on the internal market;
  3. a decision prohibiting the award of the contract, if it finds that a foreign subsidy distorts the internal market, and the undertaking concerned does not offer commitments or where the Commission considers that the commitments offered are neither appropriate nor sufficient to fully and effectively remove the distortion.


The Proposal should now enter the ordinary legislative procedure within the EU institutions. If adopted, it could result in a significant increase of the administrative burden on undertakings wishing to participate in large-scale public procurements procedures in EU.


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