BRUSSELS — The European Commission is cracking down on two Chinese companies, airport scanner maker Nuctech and e-commerce giant Temu, that are suspected of unfairly penetrating the EU market with the help of state subsidies.

The EU executive opened an in-depth probe into Nuctech under its Foreign Subsidies Regulation on Thursday, a year and a half after initial inspections at the company’s premises in Poland and the Netherlands.

“The Commission has preliminary concerns that Nuctech may have been granted foreign subsidies that could distort the EU internal market,” the EU executive said in a press release. 

Nuctech is a provider of threat detection systems including security and inspection scanners for airports, ports, or customs points in railways or roads located at borders, as well as the provision of related services. 

EU officials worry that Nuctech may have received unfair support from China in tender contracts, prices and conditions that can’t be reasonably matched by other market players in the EU. 

“We want a level playing field on the market for such [threat detection] systems, keeping fair opportunities for competitors, customers such as border authorities,” Executive Vice President Teresa Ribera said in a statement, noting that this is the first in-depth investigation launched by the Commission on its own initiative under the FSR regime. 

Nuctech may need to offer commitments to address the Commission’s concerns at the end of the in-depth probe, which can also end in “redressive measures” or with a non-objection decision.  

The FSR is aimed at making sure that companies operating in the EU market do so without receiving unfair support from foreign governments. In its first two years of enforcement, it has come under criticism for being cumbersome on companies and not delivering fast results. 

In a statement, Nuctech acknowledged the Commission’s decision to open an in-depth investigation. “We respect the Commission’s role in ensuring fair and transparent market conditions within the European Union,” the company said.

It said it would cooperate with the investigation: “We trust in the integrity and impartiality of the process and hope our actions will be evaluated on their merits.”

Temu raided

In a separate FSR probe, the Commission also made an unannounced inspection of Chinese e-commerce platform Temu. 

“We can confirm that the Commission has carried out an unannounced inspection at the premises of a company active in the e-commerce sector in the EU, under the Foreign Subsidies Regulation,” an EU executive spokesperson said in an emailed statement on Thursday.  

Temu’s Europe headquarters in Ireland were dawn-raided last week, a person familiar with Chinese business told POLITICO. Mlex first reported on the raids on Wednesday. 

The platform has faced increased scrutiny in Brussels and across the EU. Most recently, it was accused of breaching the EU’s Digital Services Act by selling unsafe products, such as toys. The platform has also faced scrutiny around how it protects minors and uses age verification. 

Temu did not respond to a request for comment.