The EU Excludes Economic Operators And Restricts The Use Of Medical Devices Originating In The People's Republic Of China

The EU adopts rules restricting the access of economic operators and the use of medical devices originating in the People's Republic of China to the EU public procurement market. The new rules will apply from 30 June 2025 and will have consequences for both contracting authorities and tenderers.

The new rules apply to tender procedures:

regarding the procurement of medical devices,
subject to the EU procurement directives (Directive 2014/23/EU, Directive 2014/24/EU and Directive 2014/25/EU),
where the estimated value is EUR 5m exclusive of VAT or more, and
with the tender procedure commencing as from 30 June 2025.

However, the rules do not apply when awarding contracts under an existing framework agreement.

Background

Based on the rules set out in Regulation (EU) 2022/1031 of the European Parliament and of the Council of 23 June 2022 (the "IPI Regulation"), the Commission has researched the market for medical devices in China and concluded that China, through a combination of national rules, preferential policies and centralised procurement schemes, systematically excludes foreign medical devices from public procurement.

The Commission has assessed that this conduct constitutes third-country measures or practices within the meaning of the IPI Regulation and has therefore, by Implementing Regulation (EU) 2025/1197 of 19 June 2025, adopted a so-called IPI measure restricting the access of economic operators and medical devices originating in China to the EU public procurement market for medical devices.

The new rules impose obligations on both contracting authorities and economic operators in tender procedures subject to the IPI measure.

Contracting authorities must disclose the IPI measure in the procurement documents

Contracting authorities must include a reference to the application of the IPI Regulation and the IPI measure in the public procurement documents for covered procurement procedures.

In the procurement documents, contracting authorities must also refer to the obligations of successful tenderers (suppliers) to be found in Article 8 of the IPI Regulation.

Exclusion of tenders and limitation of subcontracting

Contracting authorities must exclude tenders from economic operators originating in China, see Article 1(1) of the IPI measure.

Contracting authorities must also order successful tenderers (suppliers) not to subcontract more than 50% of the total value of the contract to economic operators originating in China, see Article 8(1)(a) of the IPI Regulation.

For the above purpose, contracting authorities must determine the origin of tenderers and subcontractors in accordance with Article 2(2)(a) of the IPI measure and Article 3 of the IPI Regulation.

In that connection, an economic operator (legal person) is deemed to originate in China if it is constituted or otherwise organisationally linked to China and engages in substantive business operations in China, see Article 3(1)(b)(i) of the IPI Regulation.

If the economic operator does not engage in substantive business operations in China, or it is not constituted or otherwise organisationally linked to China, the economic operator originates in China if the person or persons who directly or indirectly exercise a dominant influence on the economic operator originate in China, see Article 3(1)(b)(ii) of the IPI Regulation.

Restriction on medical devices originating in China

Contracting authorities and successful tenderers (suppliers) must also ensure for the duration of the contract that medical devices supplied as part of the performance of the contract and originating in China do not represent more than 50% of the total value of the contract, regardless of whether the medical devices are supplied directly by the successful tenderer (supplier) or by subcontractors, see Article 8(1)(b) of the IPI Regulation.

Contracting authorities must therefore also determine the origin of the medical devices in accordance with Article 2(2)(a) of the IPI measure, Article 60 of Regulation (EU) No 952/2013 (the "Union Customs Code") and Commission Delegated Regulation (EU) 2015/2446 as regards detailed rules concerning certain provisions of the Union Customs Code. The origin of medical devices must therefore be determined based on the principles of 'wholly obtained in a single country' and 'last substantial transformation', and in order to assess where the last substantial transformation took place, it is in practice important to obtain information from the tenderers and any subcontractors regarding all materials used.

Evidence of origin

Contracting authorities must request relevant evidence of origin (i) in case of reasonable indications of excessive use of subcontractors or medical devices from China, or (ii) if the contract is awarded to a group of economic operators (e.g. an association or consortium) comprising a legal person originating in China, see Article 8(2), second sentence, of the IPI Regulation.

Contracting authorities may also at any time request information on the origin of the medical devices supplied under the contract.

Upon request and no later than upon performance of the contract, successful tenderers (suppliers) must provide satisfactory evidence of the use of subcontractors and medical devices originating in China, see Article 8(1)(c) of the IPI Regulation, and in this respect it is sufficient to provide evidence that more than 50% of the total value of the contract originates in countries other than China, see Article 8(2), first sentence, of the IPI Regulation.

In practice, documentation may include relevant invoices, statements from external suppliers, declarations or certificates of origin or statements about the proportion of medical devices originating in China in relation to the total value of the contract.

In the event of doubt about the origin of medical devices, SMEs in particular may also request binding origin information from the relevant authorities.

Non-observance is sanctioned by way of a proportionate charge

Successful tenderers (suppliers) must pay a proportionate charge of between 10% and 30% of the total value of the contract if they fail to observe the obligations to limit the use of subcontractors and medical devices originating in China, see Article 8(1)(d) of the IPI Regulation.

The actual amount must be determined on a case-by-case basis and may, for example, depend on the proportion of medical devices in respect of which there is reasonable doubt.

Reporting obligations of contracting authorities

In notices of contracts awarded, contracting authorities must report on the use of the IPI measure, including the number of tenders from third countries subject to the IPI measure and the number of excluded tenders.

Comments by Bech-Bruun

The new rules in particular on determining the origin of medical devices may impose a number of new and stricter requirements on contracting authorities and tenderers in connection with tender procedures for the procurement of medical devices. Contracting authorities need, for example, to assess whether the evidence of the origin of medical devices is adequate and in accordance with the rules of the EU Customs Code.

The rules on the calculation of the 50% threshold in relation to subcontracts and the proportion of medical devices in relation to the total value of the contract also raise a number of questions, including whether the value must be calculated in relation to the total amount to be paid by the contracting authority or, for example, the tenderers' (suppliers') costs.