Chinese railway giant CRRC has been forced out of a Lisbon metro contract in favour of a Polish firm, after a European Commission investigation found that foreign subsidies allowed CRRC to underbid rivals.
“The in-depth investigation confirmed these preliminary findings, revealing that the subsidies in question had indeed given the consortium an unfair competitive edge, to the detriment of other bidders taking part in the tender and the integrity of the EU’s internal market,” the European Commission said in a statement on Tuesday.
The Mota-Engil-led consortium, which submitted the lowest bid of €598.8 million for the construction and maintenance of the Portuguese capital’s new Violet Line, proposed replacing CRRC with Polish rolling stock manufacturer PESA – a commitment the European Commission accepted as sufficient to remove the distortion.
The China Chamber of Commerce to the EU (CCCEU) expressed its strong opposition and deep concern at the decision, arguing that the EU failed to adequately explain why a subcontractor holding less than 10 per cent of the contract value was deemed critical enough to warrant corrective action, the group said in a statement.
The CRRC took part in the consortium as a subcontractor to provide metro cars for the project – a role estimated to be worth around €50 million, or just a fraction of the total bid, according to the CCCEU.
CRRC Portugal did not reply immediately to a request for comment.
The tender process was launched by the Lisbon Metro in April 2025, and Brussels launched its in-depth investigation under the foreign subsidies regulation (FSR) into CRRC Portugal’s participation in November.
After CRRC Portugal withdrew from the bidding and said that it was “not in a position to obtain or share” information on other companies in the CRRC group, the European Commission decided to continue its probe, according to an EU official, who spoke on condition of anonymity.
Brussels was concerned that the firm would re-enter the bidding “through the back door”, as Mota-Engil kept the prices and technical arrangements that matched those offered by CRRC in its bid, the source said.
CRRC companies had withdrawn from previous tenders in Europe after FSR probes were opened, with Chinese businesses complaining that they could not legally share information without breaking domestic laws on data transfers and sharing state secrets.
It marks a break from tradition, where the European Commission dropped the FSR probe after Chinese companies withdrew from bidding.
The commission found that CRRC received government support and subsidies “in the order of billions”. While officials were not able to access all of the company’s books, they made the judgment based on “facts available” – a legal provision allowing regulators to source information by other means when a party does not cooperate or provides insufficient information.
EU officials said they identified grants made to the CRRC group, tax benefits – including some cuts from 25 per cent to 15 per cent for some CRRC subsidiaries – pre-tax deductions, preferential loans and bonds, and the award of “non-transparent public procurement tenders”.
Brussels also identified a “de facto” state guarantee that cut costs and allowed the company to subsidise innovation capacity, according to the EU official involved
The CCCEU said firms were, on multiple occasions, given “extremely short deadlines of only two to three days” to submit complex materials, with insufficient consideration given to the time needed for cross-border evidence gathering, which the CCCEU said undermined the effective exercise of companies’ due process rights.
The chamber further criticised the foreign subsidies regulation as an “arbitrary” and “discriminatory” tool being weaponised to exclude Chinese firms from European markets.
The decision is the latest flashpoint between Beijing and Brussels over the FSR. China’s Ministry of Commerce expressed strong opposition in December to the EU’s FSR investigations into Chinese companies – naming the CRRC and Nuctech as examples – calling the actions “egregious, with clear targeting and discriminatory intent” and vowed to use necessary means to defend their rights.
Last week, airport-scanner-manufacturer Nuctech began litigation proceedings against the European Commission over its use of the FSR against the firm in 2024.
In a previous case that was rejected by the EU’s General Court in Luxembourg, Nuctech had claimed it was unable to comply with the commission’s request to hand over reams of information because the firm would contravene laws governing data flows and state secrets in China.