Korean Companies May Become Innocent Victims
The European Commission is working on a bill to regulate foreign subsidies. According to it, any foreign company wishing to sign a sizeable M&A deal in the European Union or export to the European Union on a public procurement basis must report subsidies it received in its home country for three years and obtain an approval from the European Union.
False data submission or non-submission can be subject to a fine equivalent to 1 percent to 10 percent of sales. In addition, the European Union can initiate an investigation on every possibility of subsidy-based competition distortion.
“The application of the new regulation has to be limited to countries lacking transparency in terms of subsidy operation,” said the American Chamber of Commerce in the European Union, adding, “The cost burden and time delay attributable to the data preparation will hinder market innovation in the European Union in the end.”
“What is important is smooth data exchange using existing bills, not a new bill,” the Chinese Chamber of Commerce and Industry in the European Union commented, continuing, “This new regulation will lead to a decrease in corporate investment in the European Union.”
“South Korea is keeping the transparency in accordance with its FTA with the European Union and yet South Korean companies may become innocent victims,” the Korea Business Association Europe pointed out, adding, “This is because the bill has too much room for arbitrary interpretation and application.”