European Commission opens probe into Chinese unfair competition in Lisbon metro tender

Brussels – The EU Commission is launching an investigation into possible market distortions in the tender for the Lisbon metro as it suspects that Portugal CRRC Tangshan Rolling, the Portuguese subsidiary of China’s CRRC Tangshan, benefited from significant foreign subsidies. The investigation will “assess whether foreign subsidies allowed the Chinese state-owned rolling stock manufacturer CRRC to submit an unduly advantageous offer,” Executive Vice President for Industrial Strategy, Stéphane Séjourné, clarified in a statement.

The Commission may accept remedies, prohibit the contract award, or issue a no-objection decision.. Séjourné reiterated that “protecting our Single Market from distortions is essential to ensure fair competition, support companies that compete on merit, and safeguard the Union’s economic security​.” Beijing’s influence in the public transport sector is increasing year after year in the Union; for example,  Romania, Hungary, and Portugal have preferred Chinese railway wagons over European ones. 

The tender 

The Portuguese subsidiary of CRRC had bid for the new “violet”  line of the Lisbon Metro together with the Portuguese construction giant Mota-Engil. The offer was for 598.9 million euros, just under Metropolitano de Lisboa’s EUR 600 million budget.

The first public tender was called on March 15, 2024, but was unsuccessful as all proposals exceeded the tender price limit by an average of approximately 46 percent. Mota-Engil and Portugal CRRC’s proposal turned the tables, significantly increasing the chances of an award to the Sino-Portuguese consortium. If the European institutions were to block the contract, the tender would be left without an operator, making completion by 2029 unrealistic.

Trains arriving from China 

CRRC is no stranger to significant investments in Europe. Its rail vehicles have lower prices than their European competitors, by about 10-30 percent, and features that are suitable for environments where light weight and low consumption are required.

Chinese vehicles are already running on the tracks of the Bucharest tramway as well as in the Hungarian railway stations. Additionally, China Railway International Co. is constructing the high-speed Budapest-Belgrade line, at a total cost of approximately 3.6 billion euros. In the future, tracks will run 20 units of the high-speed vehicles produced by CRRC. Now, the expansion is also extending to the other side of the continent: the city of Porto has opted for the Chinese “ML20” for the Porto metro.

The Commission’s action

The European Union can initiate investigations, impose tariffs, and adjust the pricing and distribution of Chinese goods in Europe while attempting to protect its domestic production. Yet, despite this, Beijing’s influence is rapidly growing. EU interventionism could alter this trend, even if it comes at the expense of building large infrastructure projects at times.