The European Union (EU) has started investigating a unit of Chinese state-owned train maker CRRC Corporation over alleged unfair foreign subsidies.

This is the first investigation under the bloc’s new foreign subsidy rules, which came into effect in July 2023. The rules allow distortions caused by foreign subsidies to be addressed, enabling the EU to ensure a level playing field for all companies operating in the internal market while remaining open to trade and investment.

The investigation relates to a public procurement procedure by Bulgaria’s Ministry of Transport and Communications, seeking the provision of electric trains, maintenance and training, the European Commission said in a recent statement.

The probe follows a notification by CRRC Qingdao Sifang Locomotive, a subsidiary of CRRC.

A preliminary review found “sufficient indications that this company has been granted a foreign subsidy that distorts the internal market,” the commission stated.

The European Commission has until July 2 to make a final decision.

The Bulgarian Ministry of Transport and Communication public procurement tender is for 20 electric “push-pull” trains and their maintenance over 15 years. The estimated value of the contract is around €610 million.

CRRC is the world’s largest rolling stock manufacturer in terms of revenue.