The European Commission (EC) has granted conditional approval to Chinese e-commerce company JD.com’s proposed acquisition of German electronics retailer Ceconomy.
The approval, granted under the EU Foreign Subsidies Regulation (FSR), follows an in-depth investigation launched in May and the July issuance of a Statement of Grounds by the EC.
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The EC concluded that JD.com had received preferential financing, tax incentives and grants from China, and that these could distort competition within the EU internal market.
It said the subsidies had contributed to logistics and technology capabilities that would be supplied to Ceconomy once the acquisition is completed.
It further held that they could strengthen JD.com and Ceconomy’s ability to fund EU operations and adopt aggressive pricing strategies that could place competitors at a disadvantage.
In response, the two companies undertook to carry out transactions within the group, such as JD.com’s financing of Ceconomy, on market terms.
JD.com also promised to offer third-party retailers warehousing, logistics and technology services on terms identical to those given to Ceconomy.
The parties bolstered their commitments on group dealings and financing, and enhanced the terms offered to third parties for logistics and technology services, following a market test.
The EC said the commitments would stop cross-subsidisation between JD.com and Ceconomy and eliminate the competitive advantage that the combined entity gains from JD.com’s subsidised logistics and technology capabilities.
JD.com must comply in full with the commitments, which will apply for ten years.
An independent trustee will monitor implementation, working under the EC’s supervision.
Applicable since 12 July 2023, the FSR enables the EC to deal with competition distortions stemming from foreign subsidies.
Ceconomy owns retail brands in consumer electronics, among them MediaMarkt, MediaWorld and Saturn.
These trade through online and physical stores in several EU member states.
EC Clean, Just and Competitive Transition executive vice-president Teresa Ribera said: “Consumers benefit from a competitive retail and e-commerce sector, with a level playing field for companies.
“The parties’ constructive approach has enabled commitments that effectively address the identified foreign subsidies and their potential distortive effects in the internal market, including by preventing cross-subsidisation of the parties’ European operations.”
