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by
Jordy Leo
- February 21, 2024
The EU has opened an anti-subsidy investigation into Chinese train maker Qingdao Sifang Locomotive, a subsidiary of China’s state-owned CRRC Corporation [601766:CH], as reported by Reuters on February 16. The probe targets a contract between Bulgaria and Qingdao Sifang Locomotive on the procurement of 20 electric trains worth around EUR610m. As the favored bidder, the Chinese company submitted a bid 46.7% below the cost estimated by the Bulgarian railways and 47.5% lower than the price offered by the nearest rival. The European Commission alleged that this unusually cheap tender was made possible by a EUR1.75bn subsidy from the Chinese government. The Commission will open a full-scale investigation on whether the foreign financial contribution Qingdao Sifang Locomotive received from its parent company is a subsidy that gives it a direct or indirect selective benefit and if this allowed it to submit an unduly advantageous tender.
This marks the first investigation under the EU’s Foreign Subsidies Regulation (FSR), which took effect last July to prevent foreign subsidies from distorting the single market. Under the new law, companies must report any state subsidies they have received when bidding for procurement tenders in the EU. The law will also give the Commission authority to block the award of the contract or accept remedies proposed by the company. EU competition chief Margrethe Vestager stated that the bloc has an obligation to use the law to ensure fair competition. However, she clarified that these measures are not specifically targeting China. Last December, the EU also launched an anti-subsidy investigation into Chinese electric vehicles.
Sources:
https://www.ft.com/content/6dbc828f-03bc-4418-bbd0-4ff194d3f830
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