JD.com’s US$2.6 billion bid for Germany’s Ceconomy faces deeper EU scrutiny
European Commission launches in-depth investigation under Foreign Subsidies Regulation in latest instance of Brussels-Beijing tensions
The probe under the bloc’s Foreign Subsidies Regulation (FSR) is the latest flashpoint in the European Union’s scrutiny of Chinese firms, with the bloc increasingly seeking to shield its market from what it perceives as unfair state-backed advantages.
A preliminary investigation showed that the Chinese firm could have received foreign subsidies that distorted the EU internal market, including “financing, tax incentives and grants” from China, the European Commission said in a statement on Thursday.
“In particular, the commission preliminarily identified concerns that the potential foreign subsidies have enabled JD.com to offer conditions that potentially distorted the negotiation process related to the acquisition of Ceconomy,” the statement said.
“Price premiums are common in merger and acquisition practice, as transaction prices are driven by multiple market factors.”
The full investigation would examine whether foreign subsidies gave JD.com an unfair advantage during the acquisition, allowing it to bid higher and leverage its technology and logistics to support Ceconomy, the commission said.
It would also assess whether such subsidies could strengthen the merged entity’s market position in ways that harmed competition within the internal market.