The European Commission opened an in-depth investigation on Thursday 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 Commission 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, it said.

It would also examine whether the aid improved the merged entity’s competitive position after the transaction.

“The proposed acquisition of CECONOMY AG by JD.Com will not be financed by any foreign subsidies granted by China or any other non-EU Member State, but instead is funded by external private bank debt and available cash from ordinary course business activities,” the company said it the statement.

“JD.Com has not received any foreign subsidies in relation to the transaction that might give rise to a distortion of competition in the EU,” the company also added.

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 euros.

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.

EU resistance

The EU investigation was opened under rules adopted in 2023 to tackle 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 the Chinese group Nuctech, which specialises in security screening equipment.

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.

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

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

The opening of an in-depth investigation does not prejudge its outcome, said the Commission.

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