Non-EU Investors and Portfolio Companies Face Growing Risk of Exclusion from EU Public Procurement

As Europe seeks to regain “strategic autonomy” and move towards a “Buy European” agenda following vulnerabilities exposed by the pandemic, the war in Ukraine, and rising trade tensions with the U.S. and China, there has been fresh clarity over the type of protections available to “non-EU” bidders in public procurement tenders, as well as new legislative tools to tackle concerns around unequal access to procurement markets in the EU and abroad. This client alert maps the key risk areas for US and other “non-EU” investors and provides practical steps to mitigate growing risks for new and existing investments.

Key Takeaways

• The EU’s highest court recently ruled that “non-EU” bidders do not hold the same rights of equal treatment and access to EU remedies in public tenders not covered by existing bilateral or multilateral trade agreements, including the WTO Government Procurement Agreement. Instead, public contracting authorities retain broad powers to exclude or negatively rank “non‑EU” bidders in non-covered tenders at any stage of the process, with any remedies limited to national laws.
• Companies also face growing exclusion risk under sector-specific product origin rules – which apply even to “EU” bidders. Examples include the utilities sector, where tenders can be rejected if more than 50% of goods originate in “non‑covered” countries such as China. Product restrictions are currently limited to certain sectors, although the stage is set for wider “Made in Europe” content-rules in the forthcoming Industrial Accelerator Act due to be proposed later this month.
• The European Commission also now has the power to impose (retaliatory) market‑access limits for non‑EU bidders in strategic sectors where it considers persistent restrictions are faced abroad, although enforcement action to-date has been limited to Chinese companies bidding for medical device tenders above a certain value.
• Investors should factor these growing risks into investment theses for new acquisitions where targets have significant ties to EU public procurement, and take proactive steps to mitigate exposure of existing portfolio companies (including through bidding via EU vehicles with real substance or EU partners, stress testing supply chains for origin exposure, and engaging early with authorities on tender eligibility).

Growing exclusion risks for “non-EU” investors and portfolio companies in EU public procurement

In two recent landmark decisions (Case C‑652/22 – Kolin Inşaat Turizm Sanayi ve Ticaret and C‑266/22 – CRRC Qingdao Sifang), the EU’s highest court ruled that “non-EU” bidders for public tenders that are not covered by a bilateral or multilateral procurement agreement do not have equal treatment or remedy access under EU procurement law. Instead, contracting entities can decide on a case-by-case basis whether and how to admit non-EU bidders in public tenders, including through the application of price or score adjustments. The European Commission further clarified that contracting entities retain this power throughout the tender, meaning they can exclude “non-EU” bidders at any stage of the process.

These rulings have far-reaching consequences. Whether “non-EU” bidders can be admitted into public procurement tenders now therefore turns on a key question: is there an existing procurement agreement in place that covers the bidder’s origin country and tender in question? The most significant of these is the WTO Government Procurement Agreement (“GPA”), which grants participating countries (such as the US and UK) non‑discriminatory, transparent access for tenders involving specific contracting entities, goods or services and monetary values.[1] In the schedules concerning US bidders, notable exclusions include goods or services in the utilities (e.g. energy, water, transport) and defence sectors. 

Exclusion can also hinge on product origin, even for EU bidders

Beyond bidder origin, the origin of products being procured can also result in bidders being excluded from procurement tenders in certain sectors. A key example of this is the utilities industry, whereby contracting entities are empowered under Article 85 of the Utilities Directive to reject bids where more than half of the products originate from “non‑covered” third countries and must give preference to equivalent offers that avoid this issue. “Origin” is assessed under preferential customs rules, i.e. where they are wholly obtained, or – if production spans multiple countries – where they underwent their last substantial, economically justified transformation that created a new product or a significant manufacturing step. In practice, this means that even EU bidders whose supply chains rely heavily on third‑country inputs can be excluded from EU public procurement tenders. 

Building on existing sector-specific legislation, the Commission is also expected to set out additional “Made in Europe” content-origin requirements for certain strategic sectors in proposed Industrial Accelerator Act (“IAA”) later this month (which currently focuses certain high-emission industrial materials, such as steel and cement, which are considered key for the decarbonization of European value chains). As the IAA requirements are only in draft form and are many years off being implemented (if at all), these will be addressed in a later client alert once the proposals are more concrete.  

The EU International Procurement Instrument is yet another exclusion lever

In August 2022, the EU also equipped itself with another powerful new trade tool, the International Procurement Instrument (“IPI”), giving the European Commission the power to restrict or exclude certain foreign bidders from public procurement tenders above a certain value (i.e. EUR 5 million for works and concessions or EUR 300k for goods and services) where EU companies face persistent, systemic barriers abroad. The available IPI measures include (i) score adjustments of up to 50% applied to tenders from targeted countries; or (ii) outright exclusion of such tenders from procurement procedures.

Although multiple investigations are reported to be ongoing, the first substantive action under the IPI was taken in June 2025, when Chinese bidders were excluded from participating in public procurement for medical device contracts with an estimated value of EUR 5 million or more. While the IPI can only be implemented at the EU level and not by individual contracting entities or Member States, this enforcement action shows that the EU can – and will – impose market‑access restrictions in strategic sectors where a sees a threat.

Conclusion and key takeaways for US and other “non-EU” investors

These legal developments ultimately reflect a broader political shift within the EU towards prioritising European strategic autonomy and addressing perceived asymmetries in global market access through a “Buy European” agenda. European policymakers have grown particularly concerned in recent years that whilst EU procurement markets remain largely open to foreign bidders, European companies face significant barriers in parallel tenders abroad – including in China and the U.S..

It is therefore vital that “non-EU” investors keep these considerations front of mind when assessing new transactions with significant EU public procurement exposure, and take proactive steps now to reduce the impact on existing portfolio companies. In particular:   

• Map GPA coverage precisely: assess each tender against GPA schedules by contracting entity, sector, category and threshold to understand whether equal-treatment rights apply.
• Ensure bidding vehicles satisfy “buy European” criteria: bid through EU‑incorporated vehicles with substantive EU operations, where appropriate, and consider partnering with EU‑based consortia members.
• Scrutinize utilities supply chains for origin-based pitfalls: where necessary, consider EU‑origin alternatives and document equivalence where small pricing gaps could avoid exclusion or secure preference.
• Engage early with contracting authorities: seek upfront clarity on admissibility and product origin criteria. Early dialogue often surfaces red flags that may only appear later in the process.

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[1] Alongside EU member states, the GPA signatories include: Armenia, Aruba, Australia, Canada, China, Hong Kong, Iceland, Israel, Japan, Liechtenstein, Moldova, Montenegro, New Zealand, North Macedonia, Norway, Singapore, South Korea, Switzerland, Ukraine, UK, and USA.