The investigation will be the first major test of the EU’s foreign subsidies regime in a Chinese M&A transaction.
Chinese ecommerce giant JD.com has become the first company whose European acquisition has been subjected to the EU’s Foreign Subsidies Regulation (FSR), as the European Commission examines whether Chinese state support gave the company an unfair advantage in its proposed takeover of Germany’s Ceconomy, owner of the MediaMarkt and Saturn retail chains.
The FSR, which entered into force in 2023, allows Brussels to investigate whether financial support from non-EU governments may distort competition in the bloc’s internal market. The commission’s first major test case stems from JD.com’s planned €2.2 billion acquisition of Ceconomy, announced in July 2025. The in-depth investigation is due to be completed by Oct. 2.
One of the key questions is whether foreign subsidies enabled JD.com to offer a price that rival bidders could not match. The company valued Ceconomy at €4.60 per share, roughly 43% above the target’s undisturbed share price before the deal was announced. However, proving that the offer was inflated may be difficult given the lack of competing bidders for the asset.
Beyond pricing, regulators are also examining other potential advantages enjoyed by JD.com. The company has proposed combining its technological and logistics capabilities with Ceconomy’s retail network, a proposition that may have made it the most attractive buyer. Brussels is seeking to determine whether those advantages were developed with the benefit of state support.
JD.com has rejected the regulators’ concerns. The company says the acquisition will be financed through available cash and external private bank debt rather than subsidies, and that it has not received foreign subsidies related to the transaction that could give rise to a distortion of competition in the EU.
The acquisition also requires foreign direct investment approvals in Germany and Austria. In Austria, the process has become more complicated after JD.com withdrew its filing for clearance, while the timeline for obtaining approval remains uncertain.
The probe comes amid a tougher stance by Brussels toward Chinese businesses. For Chinese companies, it represents the first major test of the EU’s foreign subsidies regime in the mergers and acquisitions sector. Under the terms of JD.com’s agreement with Ceconomy, the transaction will automatically lapse if all required approvals have not been obtained by Nov. 10.
Source: MLex
