The European Commission has opened an in-depth investigation under the Foreign Subsidies Regulation (FSR) into the activities of Nuctech in the production and sale of threat detection systems (TDS) and related services within the European Union. The Commission has expressed preliminary concerns that Nuctech may have benefited from foreign subsidies granted by the People’s Republic of China (PRC), potentially distorting competition in the EU internal market.
Nuctech, headquartered in the PRC, is part of the Tsinghua Tongfang group, a state-controlled entity. The company is active globally in the manufacture and sale of security and inspection technologies, including scanners used at airports, ports, customs crossings on railways and roads, and other border control points. Its EU operations include subsidiaries in Poland and the Netherlands involved in the production, sales, and maintenance of threat detection systems.
The Commission launched the investigation ex officio in April 2024, conducting inspections at Nuctech’s EU premises. The preliminary review identified several types of support measures granted by the PRC—such as grants, preferential tax treatment, and favourable loans—that may qualify as foreign subsidies under the FSR. According to the Commission, these measures may have strengthened Nuctech’s competitive position, enabling it to offer prices and contractual conditions in tenders that competitors cannot reasonably match, particularly in the supply of large threat detection systems and associated services.
The in-depth investigation will assess whether these preliminary findings are confirmed. The Commission emphasised that opening the investigation does not prejudge its final outcome. At the conclusion of such proceedings, the Commission may accept commitments, impose redressive measures, or close the case with a no-objection decision.
This marks the first in-depth ex officio investigation under the FSR, which has been applicable since July 2023. The Regulation empowers the Commission to address distortions caused by foreign subsidies, ensuring a level playing field for companies operating in the EU while maintaining openness to trade and investment.
Executive Vice-President Teresa Ribera highlighted the importance of fair competition in markets for security technologies that are essential to safeguarding the EU’s borders, noting the need to ensure equal opportunities for all suppliers.