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Monopoly Commission wants more bite against China ‘s state corporations message

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By Petra Sorge

BERLIN (Dow Jones) – According to experts, European companies should be protected more strongly from state-subsidized groups from China. The previous protection is “incomplete” in certain cases, for example when third countries provide subsidies, according to the 13th main report of the monopoly commission “Competition 2020”, which was presented on Wednesday. The German EU Council Presidency must ensure that the competition order is strengthened, especially with a view to the corona crisis.

To this end, the independent five-member advisory board is proposing a new third country aid instrument. “Its aim is to ensure fair competition between European and especially Chinese companies,” said the Chairman of the Monopoly Commission, Achim Wambach. Subsidies granted by third countries such as China to companies should be treated in the same way as aid from EU countries.

EU Commission should be able to impose fines

In order to obtain such protection, the European company would have to contact the European Commission directly, which would then initiate an examination procedure. The report suggests 20 percent as a threshold for excessive aid. The competition authorities could then ask the preferred third-country company to either pay a compensatory levy to the EU budget or to repay the benefits back in their home country. Otherwise there would be a risk of fines.

In the view of the Monopoly Commission, such an instrument is compatible with the rules of the World Trade Organization WTO. Because, unlike aid from a member state for a specific group, all companies in the EU internal market would be treated equally.

In order to limit China’s access to German or European companies, the federal government had already adapted the foreign trade law. Since then, more stringent test criteria have applied to takeovers by companies from third countries. While the German economy sharply criticized the move, the monopoly commission has no fundamental objections here. However, this investment control must remain limited to the protection of public security and order and should not be used for industrial policy, the report said.

More stringent regulation of digital platforms necessary

The economists have also examined the increasing growth in power of the digital corporations – and urged urgent action. Because markets could “tip over” in the Corona crisis. Commission chief Wambach therefore calls for the federal government to advocate platform regulation as part of the presidency of the council. “Abusive behavior of dominant platforms must be prevented,” said Wambach.

Dominant online companies are thus subject to certain requirements, such as a ban on self-subsidization or stricter interoperability and portability obligations. The digital giants would also have to participate better in the control by cartel authorities and become more transparent. The experts do support a “flexible application” of antitrust law in temporary corporate cooperation. However, this does not apply to the rules on merger control.

Finally, the Monopoly Commission also deals with the multi-billion dollar Corona rescue packages. The help for Deutsche Bahn AG could harm the competition in the transport sector, if these do not also benefit the competitors, warn the experts. With a view to the 9 billion euro package to Deutsche Lufthansa AG, they demand that a plan for the re-taxation of state shares is also needed.

Contact the author: petra.sorge@wsj.com

DJG / pso / smh

(END) Dow Jones Newswires

July 29, 2020 06:07 ET (10:07 GMT)



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