EU to announce draft rules to tackle state-backed foreign buyers on May 5

BRUSSELS, April 26 (Reuters) - European antitrust chief Margrethe Vestager will next week issue draft legislation aimed at staving off a potential post-coronavirus buying spree of cheap assets, a move seen as aimed mainly at Chinese state-owned companies backed by subsidies.

The European Commission’s plan underscores a more protectionist line prompted by a recent mini-wave of EU takeovers by foreign companies and fears of a post-virus buying spree of EU firms that have seen their share prices decline in a recession.

Vestager will present her draft on May 5 according to a Commission agenda, almost a year after announcing her intentions.

Her initial proposal would force foreign firms acquiring more than 35% in an EU company with a turnover of more than 100 million euros to inform the Commission if they have received more than 10 million euros in state aid.

Companies could face fines or see deals vetoed if they fail to notify the EU executive, and buyers may have to sell assets to make up for any unfair advantage gained.

Companies already present in the 27-country bloc and receiving more than 200,000 euros in subsidies over three years may have to report the amount to the Commission.

The proposal may be modified next week after the Commission received more than 150 responses to the draft, including from EU countries, foreign governments, industry associations, companies, trade unions and individual citizens.

An example of EU concerns came in 2016 when German officials described the Chinese takeover of Bavarian robotics firm Kuka as a wake-up call that underlined the need to shield strategic parts of the economy.

In December, Germany blocked the takeover of satellite and radar technology firm IMST by a subsidiary of China’s state-controlled missile maker China Aerospace and Industry Group on national security grounds. (Reporting by Foo Yun Chee; Additional reporting by Philip Blenkinsop; Editing by Hugh Lawson)