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13th Apr 2024

Chinese train firm subject to first EU probe for foreign subsidies

  • Details shared by the commission show that the deal with the Chinese manufacturer concerns a public tender to the Bulgarian transport ministry for 20 electric trains and a 15-year maintenance deal worth €610m (Photo: EC - Audiovisual Service)
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The EU Commission has launched its first in-depth investigation into foreign subsidies deemed potentially market distortive.

The company under investigation is a Chinese train manufacturer called CRRC Qingdao Sifang Locomotive, a subsidiary of CRRC Corporation, a Chinese state-owned company.

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The investigation was announced on Friday afternoon (16 February) after a preliminary review justified an official probe under the so-called EU foreign subsidies rules.

"This shows the commission's determination to preserve the internal market," said a commission announcement shared with the press on Friday.

Under the so-called Foreign Subsidies Regulation, companies are obliged to notify their public procurement tenders in the EU when the estimated value of the contract exceeds €250m and when the company was granted at least €4m in foreign aid within three years before the notification.

Details shared by the commission show that the deal with the Chinese manufacturer concerns a public tender to the Bulgarian transport ministry for 20 electric trains and a 15-year maintenance deal worth €610m.

The investigators aim to determine whether financial aid given to the company allowed Qingdao Sifang an unfair advantage over other companies. If foul play is discovered, the commission could block the deal or allow it to proceed if the "distortion is remedied."

The agreement could also be blocked.

EU officials wanting to protect Europe's open economy have been reluctant to tighten economic controls.

But against the backdrop of increasing geopolitical concerns, the EU commission has become convinced more controls are needed.

Last month, the commission also tabled a proposal to strengthen the EU's economic security. The plan consists of a wide range of measures, including stricter checks on foreign direct investments and more rigorous controls on exports, to prevent "undesirable leakage" of technologies and know-how to other countries, which, although not said explicitly, is understood to be targeted primarily at China.

"The simple observation is that there is fierce competition worldwide for the technologies that we need the most," competition commissioner Margrethe Vestager told the press in January. "Europe cannot be the playground for bigger players. We need to be able to play ourselves."

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