EU countries and lawmakers will on Thursday kick off discussions on a European Commission plan targeting foreign state-backed buyers of European companies amid fears of a Chinese buying spree.

The 27-country bloc fears Chinese companies reinforced with state funding may acquire European firms whose share prices have been dented by the COVID-19 pandemic.

The Commission, which announced the proposal last year, said the measure takes aim at subsidies which harm competition.

The measure also covers bids in public tenders in order to prevent foreign subsidies used to grow market share or underbid European rivals to gain access to strategically important markets or critical infrastructure.

Both EU countries and EU lawmakers agreed on their common positions on Wednesday, ahead of the negotiations to thrash out the final details of the proposal before it can become law.

EU countries however want the rules to apply to takeovers of EU companies with a turnover of 600 million euros ($633 million) and for procurement contracts above 300 million euros versus the Commission's proposed 500 million euros and 250 million euros respectively.

EU lawmakers on the other hand want to set the bar lower to cover more acquisitions and public tenders.

EU countries also want to shorten to five years the period during which the Commission can retrospectively investigate subsidies granted before the regulation enters into force.

"With this regulation we can finally end the longstanding regulatory free-for-all that pits European companies, subject to rigorous state aid control, against foreign companies that can benefit from distortive foreign subsidies on the internal market," EU lawmaker Christophe Hansen, who is steering the debate, said in a statement.

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