The European Union should rely on international trade rules, rather than protectionist tools, to ensure that foreign bids for EU companies are not backed by state aid, the EU’s antitrust chief said.

EU Competition Commissioner Joaquin Almunia’s comment came amid rising debate about whether and how the 27-country group should vet a wave of overseas takeover bids for European assets, some of which are seen as “crown jewels”.

Concerns over foreign acquisitions of Europe’s industrial champions intensifed last year when Chinese company Xinmao made a bid for Dutch cablemaker Draka , the principal automotive cable supplier of Airbus.

Antonio Tajani and Michel Barnier, EU commissioners in charge of industry and the single market, recently wrote to EU Commission President Jose Manuel Barroso, suggesting that the EU should consider a centralised body to review foreign bids on strategic grounds.

Such centralised committees exist in the United States, Canada, Japan, China and Australia.

“Of course, we must remain vigilant (for) state support granted for the purpose of making acquisitions—whether it benefits EU or foreign companies,” Almunia told an International Bar Association conference.

He said to this end, it was crucial to use the right tools.

“We should rely on the WTO rules and on Free Trade Agreements, such as the one with Korea, to prevent illegitimate investment subsidies used for the purpose of making acquisitions,” Almunia said.

“And this will benefit our own interest ... If the EU plays the protectionist card in this game, we will lose more than anybody else. I can see no better alternative than to promote a balanced and fair trade policy designed to make the world’s markets as open as Europe’s are today.”

EU businesses and assets owned by foreign investors totalled 2.7 trillion euros between 2004 and 2009, according to EU data. (Reuters)