The EC examines the Chinese applicants for the supply of trains for BDZ

The European Commission has announced that it is launching its first in-depth investigation into suspected violations of EU foreign subsidy rules. The inspection concerns a public order of the Ministry of Transport and Communications in Bulgaria for the supply of trains and is related to Chinese participants.

It is stated that the commission received data from a Chinese state-owned company (CRRC Qingdao Sifang Locomotive Co., Ltd., a subsidiary of CRRC Corporation) that fulfilled its obligations to report high-value transactions. The public contract provides for delivery and maintenance of the trains, as well as training for the Bulgarian employees, BTA reported. Under European rules on foreign subsidies, companies are required to report participation in EU public procurement tenders when the estimated value of the contract exceeds €250 million and when the company has received at least €4 million in foreign funding from at least one non-EU country in the last three years, explains the EC.

After the preliminary examination of the notification received, the commission has decided to start a thorough investigation because it finds signs that the Chinese company has received a foreign subsidy that distorts the internal European market. The commission had to assess whether the foreign financial contribution constituted a subsidy that directly or indirectly benefited the company and whether it allowed the company to submit an unduly advantageous bid, the release said.

In the investigation, the EC will further assess the alleged foreign subsidies and obtain all necessary information to determine whether they may have enabled the Chinese company to present an unduly advantageous bid in a tender. Such an offer may lead to a loss on the part of other companies participating in the public procurement procedure, notes the EC.

After completion of the examination, the commission may accept commitments undertaken by the company if they completely and effectively overcome the market distortion; to prohibit the award of the order, or not to object. The commission has 110 working days - until July 2 - to make a final decision. Undertaking the inspection does not prejudge the outcome of the investigation, the announcement said.

It is added that the Chinese company in question is the largest train manufacturer in the world in terms of revenue. The Bulgarian public order is for 20 electric trains, as well as for their maintenance for 15 years. The estimated value of the contract is about BGN 1.2 billion (EUR 610 million).

In recent years, foreign subsidies appear to have distorted the EU's internal market, including by providing an unfair advantage for acquiring companies or winning public contracts, to the detriment of fair competition, it said. The EC adds that today's inspection shows its determination to preserve the integrity of the internal market so that recipients of foreign subsidies cannot benefit from an unfair advantage to win public procurement.