Pressure from the European Commission (EC) has eliminated the Chinese manufacturer CRRC Qingdao Sifang Locomotive from the tender for the supply of 20 electric trains to the Bulgarian Ministry of Transport and Communications. The Asian conglomerate put the best offer on the table, in competition with the Spanish company Talgo, but in February the Commission opened an investigation into the public subsidies received by the virtual winner in Bulgaria. This aid could have placed it in an advantageous position, but there has been no time to conclude the analysis due to the resignation of the CRRC subsidiary.
Talgo is left alone in the process, although it remains to be confirmed that the Bulgarian Government will maintain this public contract in the face of this turn of events. For the firm chaired by Carlos de Palacio, currently subject to a public takeover bid (takeover bid) by the Hungarian consortium Ganz Mavag, it would be a new workload within a portfolio that already reaches 4,000 million euros.
In Brussels, the withdrawal of the Chinese state capital giant has been notified after the aforementioned investigations were activated within the framework of the Foreign Subsidies Regulation. Following the departure of CRRC, considered the largest manufacturer in the world, the EC closes the aforementioned investigation. Talgo's proposal is based on trains with 383 seats for a total of 623 million euros. Its rival was willing to supply 406-seat models for 320 million. The 20 electric trains and their maintenance for 15 years were valued at 1.2 billion Bulgarian levs (about 613 million euros) in the tender document.
The Commission had until July 2 to resolve this case, in which the possible veto of the Chinese company was debated. This which is now concluding was the first in-depth investigation into the potential distortions of foreign subsidies to companies operating in the European single market. Before the EC took action, it was the CRRC itself that communicated, at the end of January, the aid received. And that notification has already led to a preliminary analysis. It was then found that there was sufficient evidence that this subsidiary of the CRRC group had been granted a foreign subsidy that distorted the internal market.
The aforementioned Regulation on Foreign Subsidies began to operate in July of last year. This is a regulatory shield through which community authorities can put a magnifying glass on the public support received by foreign firms that compete in Europe. This seeks to preserve equal conditions in competition, which has been a key demand of the European industrial sector for years.
The Regulation itself obliges companies to notify their presence in public tenders in the EU when the estimated value of the contract is greater than 250 million euros and when they have received at least four million in subsidies from abroad in the three years prior to the tender in question.
The Commissioner for the Internal Market, Thierry Breton, has stated, in a harsh message against Chinese interests in Europe, that “in just a few weeks, our first investigation within the framework of the Regulation on Foreign Subsidies has already produced results. Our Single Market is open to companies that are truly competitive and play fair. “We will continue to adopt all necessary measures to preserve the economic security and competitiveness of Europe, assertively and quickly.”
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