When a change of partners rescues a bid in a tender: The case of the Lisbon metro
Can you lose a tender for hundreds of millions of euros because of a single subcontractor? Or more precisely, due to a subcontractor’s structure and sources of financing? This is an entirely realistic scenario under the Foreign Subsidies Regulation. The case of the Lisbon Metro’s Violet Line shows that even if a distortion of competition is found, the bid does not automatically have to be discarded. But it may require a major change in the entities involved in the bid.
In big infrastructure projects in the European Union, verification of offers from potential contractors is not limited to assessing the criteria stated in the tender documentation. The European Commission will also analyse the structure of entities involved in the bid, including the engagement of subcontractors and the sources for financing the offer, for possible links with foreign subsidies.
This had a concrete impact in the Lisbon Metro case. To eliminate an identified risk of distortion of competition while maintaining the bid in the tender, it was necessary to change one of the key subcontractors.
When the FSR applies—thresholds and notification obligations
The Foreign Subsidies Regulation (Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market) entered into force in 2023. The FSR altered the landscape for companies’ participation in procedures for award of major public contracts in the EU.
On top of the existing competitive criteria, such as price, quality and technology, the FSR added a new element: evaluation of the impact of public support from outside the EU, i.e. foreign subsidies, on the conditions for competition.
Under the FSR, the Commission analyses the parameters of offers, who is behind them, and the sources that give bidders a competitive advantage, particularly in the case of extensive consortia.
The FSR established specific thresholds in this respect giving rise to the duty to notify the Commission of foreign subsidies in procedures for award of public contracts. The notification obligation applies to situations where:
- The estimated value of the public procurement is EUR 250 million or more, and
- The economic operator (including related entities and the main subcontractors) received financial contributions from a third country in the preceding three years totalling EUR 4 million or more.
If these conditions are met, it is necessary to notify involvement in the procedure to the Commission for assessment of potential distortions of competition. The tender for the Violet Line of the Lisbon Metro fulfilled these criteria.
The course of the Violet Line procurement procedure
The case began with the design for a new metro line between Odivelas and Loures, developed starting in 2021 by Metropolitano de Lisboa and the local authorities, as the next stage in expansion of the transit network in the Lisbon metropolitan area. The project involved over 11 kilometres of tracks, 17 stations, an ambitious timetable, and public financing—in other words, a classic example of a major infrastructure project. But the first tender, announced in 2024, was a fiasco, as all of the bids significantly exceeded the budget. It was necessary to recalculate the project from scratch.
Thus in April 2025 Metropolitano de Lisboa again announced a major tender for design, construction and maintenance of the new Violet Line of the Lisbon Metro. FSR notification was essential, due to the scale of the procurement. The estimated value of the procurement was EUR 677.5 million (of which EUR 77.5 million was earmarks for the costs of expropriation and advisory services on review of the design and construction supervision)—in other words, it exceeded the FSR threshold of EUR 250 million.
From doubts to an in-depth investigation
Big players entered the ring. They included a consortium headed by Mota-Engil. The consortium’s bid was one of the most competitive on price. However, the structure of the bid included the subcontractor Portugal CRRC Tangshan Rolling Stock Unipessoal, affiliated with the Chinese rolling stock producer CRRC. Under normal conditions, this would not be anything out of the ordinary. But under the realities of the FSR, it was the first warning sign. The offer was announced, but the European Commission began asking questions: Was the attractive price backed by public support from outside the EU? Was competition in the tender truly fair?
Consequently, an in-depth investigation was launched on 5 November 2025 to determine whether foreign subsidies could give the contractor an undue advantage, and distort the conditions of competition in the tender.
Redressive measures in practice—hiring a Polish contractor as a condition for further participation in the tender
During the course of the in-depth investigation, the Commission found that the entity affiliated with CRRC could benefit from foreign subsidies, enabling it to submit a more advantageous offer, consequently distorting competition in the tender. Under the typical scenario, such findings would result in the contractor’s exclusion from the tender.
But in this case, the mechanism of “redressive measures” provided for in the FSR was applied. The consortium headed by Mota-Engil undertook to modify the execution structure by dropping the key subcontractor with links to CRRC, and replacing it with a Polish manufacturer of rolling stock, Pojazdy Szynowe PESA Bydgoszcz SA, which had not benefitted from any competition-distorting foreign subsidies.
The Commission found that this commitment was sufficient to eliminate the identified distortion of competition, and issued its consent to the consortium’s further participation in the procurement procedure. The Commission’s decision does not prejudge the result of the tender. The final decision on award of the contract remains with the contracting authority, Metropolitano de Lisboa, which will assess the offers for fulfilment of the technical, quality and economic requirements set forth in the tender documentation.
Summary
This is the first conditional decision issued by the European Commission concluding an in-depth investigation into a public tender under the Foreign Subsidies Regulation, i.e. conditioned on acceptance of commitments on the part of the contractor. The Commission announced that it would monitor the contractor’s compliance with its commitments, and would not take further action unless new circumstances arise in connection with foreign subsidies.
This case shows that the FSR isn’t just a tool for eliminating offers from the market, but also a mechanism for correcting the conditions of competition. However, the effectiveness of these efforts depends on the contractor’s willingness to make a significant change in the entities involved in the structure of its offer.
The case also presents an intriguing dimension under public procurement law—changing one of the main subcontractors after the deadline for submission of offers—but this aspect cannot be evaluated until the non-confidential version of the European Commission’s decision is published.
Marta Grodzki, State Aid & EU Internal Market Regulation practice, Wardyński & Partners
