The Foreign Subsidies Regulation in practice: As the Commission investigates Nuctech ex officio, who’s next?
Until recently, the FSR was regarded by many businesses as a “niche” regulation, mainly relevant only in the largest concentrations and high-value public procurements. But the ex officio investigation launched against Nuctech shows that this perception was erroneous.
This is one of the first noted cases where the European Commission is deploying the full arsenal of powers provided in the FSR (Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market)—without notification, without threshold values, and without a formal “invitation” from the undertaking.
The facts at issue in the Nuctech case
In April 2024 the Commission launched an ex officio investigation into Nuctech’s activity in the sector of threat detection systems, such as security scanners used at airports, seaports, and border crossings.
Nuctech is based in China and is part of the Tsinghua Tongfang group, indirectly controlled by the Chinese state. The company operates in the EU via subsidiaries in Poland and the Netherlands, among other entities.
When the Commission initiated its investigation, officials showed up at the European offices of group companies, conducted an inspection, and determined that there are serious grounds for suspecting that Nuctech may be benefiting from foreign subsidiaries, in the form of grants, tax relief, and preferential loans.
In the Commission’s view, such subsidies could artificially improve Nuctech’s competitive position on the EU market, particularly by allowing it to offer prices and other terms in tenders which other market participants could not reasonably match.
Possible resolution of the Nuctech investigation
Currently the case has entered the phase of an in-depth investigation, following the stage where the Commission made preliminary findings. This step does not prejudge the outcome of the case. At this stage, the Commission is only verifying whether its initial concerns are confirmed by the evidence. There are several potential scenarios. The proceeding may end without further consequences, or by accepting commitments proposed by the company. Redressive measures, such as reducing the company’s capacity or market presence, or even permanent withdrawal from certain market segments, can only be ordered if the Commission finds that there has been a distortion of the EU’s internal market.
Why the ex officio procedure, and how does this impact businesses?
Unlike notification proceedings, where the practice has already become established under the FSR, particularly in public procurements above certain threshold values (as we discussed here in the context of a Bulgarian tender for supply of trains), the ex officio procedure is not limited by the logic of thresholds or notification obligations.
Launching of an ex officio proceeding does not require achievement of a certain contract value or earlier notification by the contractor, and may occur in any sector of the economy, even after the tender proceeding has ended or the contract is already being performed.
For businesses, this represents a real change in their approach to risk. The key question now is not whether the FSR will affect a company, but whether the company is prepared for the moment when the Commission knocks on the door unannounced.
An undertaking’s informational obligations in ex officio proceedings
In the ex officio procedure, undertakings do not submit a foreign subsidy notification form, because the notification obligation, along with forms FS-CO and FS-PP, applies only in a situation where the notification thresholds have been crossed in corporate concentrations or in public procurements.
But this does not mean that businesses are relieved of informational obligations in ex officio proceedings. At its own initiative, the Commission may examine any and all information concerning suspected foreign subsidies distorting the internal market. During the proceeding, the Commission may:
- Submit a binding request to undertakings to present information
- Set a deadline for providing the information
- Rely on the available facts if the undertaking does not cooperate (e.g. if it provides incomplete, late, or misleading responses).
In practice, the scope of the information requested may be comparable to that requested in the notification forms, or may be more expansive.
New Commission guidelines—greater predictability, but not less risk
The assessment of cases like the Nuctech investigation is covered by the new Guidelines on the application of certain provisions of the FSR, issued by the European Commission on 9 January 2026. The aim of the guidelines is to increase predictability and transparency for undertakings, but they also provide a clear signal that the Commission has entered a phase of more mature and consistent enforcement of its new powers in this area.
The guidelines are not binding law, but they convey the direction of the Commission’s thinking and the manner in which the new powers will be applied in practice, particularly in ex officio cases. The guidelines confirm that the Commission will not limit itself to examining classic forms of subsidies such as grants or loans on non-market terms, but will also analyse less-obvious forms of support, such as tax preferences, selective exemptions, payment deferrals, and indirect support provided via public entities or state-controlled banks.
For businesses, this means that the FSR risk can be better identified and foreseen at the stage of planning the financing structure, the offer strategy, or the model for entering the EU market. Thus the first element worth implementing now is to verify sources of financing, support conditions, and their potential impact on competition. It is better not to assume that the absence of a notification obligation will automatically eliminate the risk of intervention by the European Commission.
Marta Grodzki, State Aid & EU Internal Market Regulation practice, Wardyński & Partners
