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First case of the new public procurement regulation in the EU hits CRRC

28 March 2024
Reading time ~ 2 min
Models of CRRC trains
Models of CRRC trains. Source: Yicai Global
Belov Sergey, Editor-in-Chief, ROLLINGSTOCK Agency
Reading time ~ 2 min
Savenkova Ekaterina, Editorial Contributor to International Projects of ROLLINGSTOCK Agency
Stolchnev Alexey, Russian Projects Editor, ROLLINGSTOCK Agency

EU: After the manufacturer withdrew its bid for the supply of 20 passenger trains to Bulgaria, the European Commission cancelled the first closed in-depth investigation initiated in February.

The investigation was aimed at confirming that CRRC had previously received a state subsidy that allowed it to offer a price of €310 mln, half the €622 mln offered by another bidder, Talgo. The purchase is being financed by EU funds.

EU public procurement rules came into force last year. Since then, tenders worth at least €250 mln and purchases of assets with a turnover of at least €500 mln in the EU have been subject to checks. These checks include an investigation into whether the non-EU bidders have received state support. The first such investigation was expected to take place against CRRC. ROLLINGSTOCK has previously reported on the new measure and its connection to the Chinese company’s activities.

The China Chamber of Commerce to the European Union has already reacted to the situation. In its view, this precedent is a further evidence that the EU is using regulatory changes as “a new tool to deter foreign companies, coercing them into withdrawal and subsequent business exclusion”.

Bulgaria is continuing negotiations with Talgo, the only remaining bidder. The customer expects the Spanish manufacturer to improve its offer. Talgo itself has already announced the technical specifications of the trains it intends to supply.

It is worth noting that, according to estimates made by the Organisation for Economic Cooperation and Development (OECD) in its 2023 report, Talgo itself ranked fourth among European rail manufacturers in terms of the share of state support in 2016–2020 revenue. With state support of around 0.3–0.4% of revenue, Talgo was second only to another Spanish player CAF, French Alstom and Polish Newag. State support for CRRC was estimated by OECD at 2.2–2.3% of revenue.

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