EU Investigation Into PRC Public Procurement for MedTech May Impact EU Market Access for PRC Companies

Concerns about the PRC’s medical devices procurement practices have led the EU to launch an investigation which could lead to the EU subjecting PRC companies, including MedTech companies, to market access restrictions in the EU. Sven De Knop, Lei Li and Maryanne Kamau explain.

The European Commission (the Commission) recently launched an investigation into certain measures in the People’s Republic of China (the PRC) that are perceived to be negatively affecting EU companies’ access to the PRC’s public procurement market for medical devices. This is the first investigation to be brought under the International Procurement Instrument (the IPI), a recent addition to the EU’s trade toolbox.

The IPI allows the Commission to investigate measures in a non-EU country which it alleges may be hindering market access for EU companies to that country’s public procurement market. The Commission can then enter into consultations with the non-EU country to eliminate or remedy those measures. The IPI applies to the procurement procedures of a non-EU country that is not party to international agreements in which the EU has made market access commitments on public procurement, as is the case with the PRC.

The investigation into the PRC’s public procurement measures for medical devices was initiated by the Commission, ostensibly without any complaints from EU industry players. On April 24, 2024, the Commission issued a notice of initiation of the investigation. This notice briefly describes the PRC measures under investigation and sets out an indicative list of medical devices (supplied by EU companies or made in the EU) that the Commission believes are affected by these measures. The investigation is expected to conclude within nine months of the date of the notice of initiation, though it may be extended by five months.

If the investigation confirms that the PRC’s measures hinder access to its public procurement market for EU companies, and the consultations with the PRC fail, the Commission could restrict access to EU public tenders for PRC bidders and products. These restrictions could take the form of score adjustment measures for PRC bidders in EU public tenders (reducing their overall score in the selection process) or exclusion of PRC bidders from EU public tenders. In addition, successful bidders (irrespective of origin) could face limitations on using PRC subcontractors, or on supplying PRC-origin products, when carrying out a public contract that has been awarded in the EU.

The exact scope of these public procurement restrictions (if any), including the specific EU public tenders to which restrictions would apply and the PRC companies and products affected, will be determined at the close of the investigation. MedTech companies in both the EU and the PRC are likely to be materially affected if (1) the PRC agrees to improve access for EU medical devices in its procurement market or (2) the Commission adopts restrictions on the PRC’s access to EU public tenders for medical devices.

Interested parties may be able to contribute to the process, even after the initial deadline for submitting comments to the Commission, through engagement with the Commission and the PRC.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.