The probe stems from surprise European Commission inspections carried out at Nuctech's premises in Poland and the Netherlands in April 2024.

The commission said it believes certain forms of Chinese government support to Nuctech "may constitute foreign subsidies distorting the internal market".

Through a mix of grants, preferential tax measures, and preferential financing, the commission said it had "concerns" that subsidies for the firm may have "negatively affected competition" in the 27-nation EU.

Nuctech, which manufactures detection scanners for airports, ports and customs services, was banned in 2021 by Lithuania over national security concerns.

"Threat detection systems... play an essential role in ensuring that Europe is open, yet secure," EU competition chief Teresa Ribera said in announcing the probe.

"So we want a level playing field on the market for such systems," she said.

The investigation was opened under EU rules adopted in 2023 aimed at tackling unfair competition from foreign companies receiving state aid.

Nuctech is a subsidiary of state-controlled Chinese group Tsinghua Tongfang, which is active in nuclear technology, IT and detection systems across several sectors.

In a statement, the firm acknowledged the commission probe and stressed that it operates "independently, transparently, and in full accordance with international trade and competition rules."

"We respect the commission's role in ensuring fair and transparent market conditions within the European Union," Nuctech said, while calling for the facts to be "assessed accurately and in an unbiased manner."