The European Union (EU) is investigating two Chinese companies over potential unfair advantages gained through subsidies in their bids for a solar power plant project in Romania. This move highlights the EU’s growing scrutiny of foreign subsidies and their impact on fair competition within the European market.
EU Questions Potential Subsidy Advantages for Chinese Bidders
The investigation focuses on two consortiums. One includes Romania’s ENEVO Group partnered with a subsidiary of LONGi Green Energy Technology Co. (LONGi), while the other involves subsidiaries of the Chinese state-owned Shanghai Electric Group Co. The total project value is estimated at around 375 million euros ($404 million).
The EU Commission, the bloc’s executive arm, suspects both Chinese firms may have benefited from government subsidies that give them an unfair edge in the bidding process. This could distort competition within the EU’s single market, harming European companies.
EU Takes Action Under New Foreign Subsidies Regulation
These investigations mark the second and third instances where the EU has employed its new foreign subsidies regulation, introduced in July 2023. This regulation empowers the Commission to assess whether foreign government subsidies enable companies to submit bids that are unfairly advantageous.
The China Chamber of Commerce to the EU expressed concern about the investigations, arguing that the regulation unfairly disadvantages Chinese companies operating within the European market. The Commission maintains that sufficient evidence justifies further investigation into the potential misuse of subsidies by the two Chinese firms.
A Wait-and-See Approach as Investigations Proceed
The Commission has until August 14, 2024, to reach a final decision. The first investigation launched under the foreign subsidies regulation involved a Chinese train manufacturer. That investigation concluded after the company withdrew its bid for a Bulgarian electric train tender.
The outcome of the current investigations regarding the Romanian solar project remains to be seen. This case will be closely watched by businesses and policymakers alike, with implications for fair competition in the EU’s green energy sector.
Source: Reuters
