EU Raids Chinese Firm Nuctech’s Offices in Ongoing Subsidy Probe

In a significant escalation of its scrutiny over foreign state subsidies, the European Commission has conducted raids at the Dutch and Polish offices of Nuctech, a Chinese security equipment company, as part of its investigation into unfair competition practices. This action, announced on Wednesday, underscores the EU’s intent to enforce its newly empowered foreign subsidies regulations, introduced in July 2023.

Nuctech, which is partly owned by the Chinese state, confirmed the raids and stated that it is cooperating with EU authorities. “Nuctech offices in the Netherlands and Poland are being inspected by the European Commission in relation to the Foreign Subsidies Regulation,” the company noted, asserting its independence as an economic entity and its commitment to defending its reputation.

The European Commission had previously hinted at possible actions against an unnamed company receiving potentially distortive foreign subsidies that could adversely affect the internal market. These suspicions led to Tuesday’s dawn raids, marking a proactive step in the Commission’s enforcement of the new regulatory framework which allows it to intervene directly in cases where foreign subsidies might allow companies to outbid European competitors unfairly.

This crackdown follows the initiation of four investigations targeting Chinese companies under the new rules, reflecting growing concerns over the competitive balance within the EU market.

In response to the raids, an official from China’s Ministry of Commerce criticized the EU’s actions as interference in competitive fairness. Similarly, the China Chamber of Commerce to the EU reported that the raid involved the seizure of IT equipment and employees’ mobile phones, while data access was demanded by the regulators.

“The EU’s actions send a detrimental message not only to Chinese enterprises but to all non-EU companies conducting business in the bloc,” the Chamber stated, reflecting broader fears among international businesses regarding the EU’s regulatory direction.

The Chinese Ministry of Commerce further emphasized that the raid “undermined the confidence of all foreign enterprises in their operations in Europe” and declared China’s intention to take necessary measures to protect its firms’ rights.