The European Commission issued a “Statement of Objections” to Chinese e-commerce giant JD.com on July 22, in regards to its acquisition of German electronics retailer Ceconomy for approximately $25 billion. The Commission preliminarily determined that the transaction may involve foreign subsidies distorting market competition, and requested JD.com to respond.
JD.com stated that receiving the “Statement of Objections” is a normal step in the European Union’s investigation process under the Foreign Subsidies Regulation (FSR). The company said it will continue to cooperate with the review and reiterated its belief that the acquisition will enhance innovation and competitiveness in the European retail industry. The review process is expected to be completed in the second half of 2026.
In May of this year, the European Commission launched a detailed investigation into the acquisition case under the FSR and set October 2 as the deadline to make a final decision on whether to approve the transaction.
The FSR, which came into effect in 2023, aims to fill the institutional gap in EU competition law. Previously, the EU mainly constrained subsidies provided by member state governments through the State Aid system, lacking an effective review mechanism for subsidies provided by non-EU countries (such as China) to businesses.
According to the FSR, if a company receives financial support from a non-EU government and gains an unfair competitive advantage in the EU market as a result, the European Commission can intervene in the investigation, require remedial measures from the company, and in some cases, even prohibit merger transactions.
The concept of “foreign subsidies” as per the FSR, must meet three conditions: provided by public institutions of non-EU countries, benefits a specific enterprise, and may distort competition in the EU internal market.
The scope of financial contributions is broad, including government grants, preferential loans, loan guarantees, tax reductions or exemptions, direct government investments, selling land below market value, or purchasing goods above market value.
The European Commission is currently investigating whether JD.com has received preferential financing, tax incentives, and various subsidies from the Chinese government and evaluating whether these supports gave it an unfair advantage in acquiring Ceconomy compared to other bidders. This is the core issue under review in this case.
If the EU ultimately finds evidence of market distortion, JD.com may be asked to provide remedial measures such as adjusting transaction arrangements, selling off assets, or making other commitments. If the remedies are insufficient, the EU has the authority to prohibit the transaction and impose fines on companies violating procedural obligations.
JD.com went public on the NASDAQ in the United States in 2014, with the stock code JD, and listed on the Hong Kong Stock Exchange in 2020, with the stock code 9618.
Annual reports filed with the U.S. Securities and Exchange Commission (SEC) by JD.com in the Form 20-F disclosures have shown that the company has received government grants or subsidies. The reports indicate that the grants mainly include support for high-tech enterprises, logistics park and smart logistics construction subsidies, cloud computing and technology research and development subsidies, local government investment incentives, and employment and talent training grants.
However, JD.com stated that the relevant subsidies are recognized in accordance with applicable accounting standards and are considered normal government support measures.
Public information shows that local governments in areas such as Beijing Economic and Technological Development Zone (Yizhuang), Jiangsu Suqian (the hometown of JD.com’s founder Liu Qiangdong), Xi’an, Wuhan and Chengdu have in recent years announced policies supporting JD.com’s logistics parks, smart logistics bases, and supply chain construction. These policies involve measures such as subsidies for fixed asset investments, land preferential policies, and logistics hub construction. Similar government support policies are not uncommon in China, with large companies like Alibaba, Tencent, Pinduoduo, and Meituan also receiving similar support.
Nevertheless, receiving government grants by businesses themselves is not illegal. The focus of the EU’s investigation this time is whether these related subsidies have given JD.com an unfair advantage in competing in the EU market or in the current acquisition transaction.
Ceconomy owns the well-known brands MediaMarkt and Saturn, operating over 1,000 stores in 11 European countries including Germany, Spain, Italy, the Netherlands, Belgium, and Austria, making it one of the largest consumer electronics retail networks in Europe.
Analysts believe that if the transaction is completed, JD.com will quickly gain access to mature retail channels, brands, and supply chain systems, which would be more efficient than establishing its own foothold in the European market.
The e-commerce market competition in China has become increasingly fierce in recent years. JD.com not only faces competition from Alibaba and Pinduoduo but also challenges from platforms such as Douyin e-commerce and Kuaishou e-commerce. With domestic business growth slowing down, JD.com continues to push for international expansion, with Europe being one of its key overseas markets.
JD.com has expressed its belief that this acquisition will enhance innovation and competitiveness in the European market and stated that it will continue to cooperate with EU regulatory authorities to complete the review process.