EU to investigate CRRC under the Foreign Subsidies Regulation

EU to investigate CRRC under the Foreign Subsidies Regulation
© European Commission

EU Commission initiated the first in-depth investigation under the Foreign Subsidies Regulation, this time regarding the public procurement process of trains in Bulgaria and the involvement of CRRC in it.

The European Commission has initiated its inaugural comprehensive investigation under the Foreign Subsidies Regulation. This action underscores the Commission's commitment to maintaining the integrity of the internal market by addressing the effects of foreign subsidies on public procurement processes within the European Union (EU). The investigation is focused on assessing the impact of foreign subsidies in the context of a public procurement procedure, aiming to ensure competitive equality by preventing companies receiving foreign subsidies from securing public contracts unfairly.

The subject of this investigation is a notification by CRRC Qingdao Sifang Locomotive Co., Ltd., a subsidiary of the Chinese state-owned enterprise CRRC Corporation. The notification pertains to a public procurement process initiated by the Ministry of Transport and Communications of Bulgaria for the supply of electric "push-pull" trains, including maintenance and staff training services.

Under the Foreign Subsidies Regulation, entities are required to report their participation in EU public procurement bids if the contract's estimated value exceeds €250 million and they have received foreign financial contributions of at least €4 million from one or more third countries in the three years preceding the notification.

Following a preliminary review, the Commission found sufficient evidence to warrant a detailed investigation into CRRC Qingdao Sifang Locomotive. The inquiry will determine whether the foreign subsidies received by the company constitute a market distortion by enabling the submission of a tender offer that may unfairly disadvantage other competitors.

The Commission's in-depth investigation will examine the specifics of the alleged foreign subsidies to ascertain their impact on the tender process. Depending on the investigation's outcome, the Commission may opt to accept remedial commitments from the company, prohibit the awarding of the contract, or decide no further action is necessary.

CRRC Qingdao Sifang Locomotive submitted its notification on January 22, 2024. The Commission has allocated 110 working days, concluding on July 2, 2024, to make a final decision. The commencement of this investigation does not imply any presumption about its conclusion.

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