EU probes Chinese giant JD.com’s bid for Germany’s Ceconomy

BRUSSELS: The EU said today that it had opened an in-depth investigation into Chinese e-commerce giant JD.com’s bid for a major German electronics retail group on suspicion it was boosted by state subsidies.

The latest EU probe to hit a Chinese firm comes as Brussels debates toughening its stance towards Beijing to shield businesses from what is perceived as unfair foreign competition.

The European Commission, the 27-nation bloc’s competition regulator, said a preliminary investigation indicated “that JD.com may have received foreign subsidies distorting the EU internal market”.

The probe would assess whether such subsidies allowed the Chinese firm to offer a high price for Germany’s Ceconomy, distorting the outcome of the acquisition process, Brussels said.

It would also look into whether the aid improved the competitive position of the merged entity after the transaction.

JD.com announced last July that it had signed a deal to acquire Ceconomy, the parent company of two major retailers, MediaMarkt and Saturn, valuing the German group at €2.2 billion (US$2.6 billion).

That drew scrutiny from Berlin, which opened its own probe on whether the purchase posed a risk to the country’s security.

MediaMarkt and Saturn have a network of more than 1,000 electronics stores, many of them in Germany but also in several other European countries, as well as online sales platforms.

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

Chinese attempts to invest in Europe have increasingly met resistance, with local businesses saying they face unfair competition from their heavily subsidised rivals.

Brussels recently opened a foreign subsidies probe into Chinese group Nuctech, which specialises in security screening equipment.

Another investigation into Chinese rail giant CRRC led to its subsidiary being replaced by a Polish manufacturer in a consortium to build a metro line in Lisbon.

Thursday’s announcement comes ahead of a special meeting of EU commissioners on Friday focused on how the 27-nation group should approach China to level the playing field.

China’s booming exports have resulted in large trade surpluses with many European countries, putting political pressure on the continent’s leaders to protect local industries.

The commission has 90 working days, or until Oct 2, to take a decision in the JD.com probe.

It could accept eventual remedies proposed by the firm, prohibit the acquisition, or let it go ahead.

“The opening of an in-depth investigation does not prejudge its outcome,” Brussels said.

المصدر: Free Malaysia Today