The European Commission has granted conditional approval for JD.com's $2.5 billion acquisition of Ceconomy, the parent company of MediaMarkt, Saturn and MediaWorld. The Commission announced the decision Tuesday following an investigation into financial support JD.com received from China, including preferential loans, tax incentives and government grants.
Regulators concluded that the assistance could give the combined company an unfair advantage over competing retailers in the European market, according to the Commission's official announcement. The decision allows JD.com to proceed with the acquisition provided the companies comply with a series of legally binding commitments lasting 10 years.
Under the agreement, JD.com must make its warehousing, logistics and technology services available to competing retailers on terms equivalent to those offered to Ceconomy. Financial arrangements and other transactions between JD.com and its German acquisition must also reflect prevailing market conditions. According to the Commission, the restrictions are intended to prevent JD.com from using state-supported resources to subsidize Ceconomy's European operations or gain a pricing advantage that other retailers cannot match. An independent trustee will oversee compliance under the supervision of EU regulators.
The approval follows an investigation launched in May, when European regulators raised concerns that financial assistance from Chinese authorities could distort competition both during the acquisition process and after the companies combined their operations. The Commission determined that JD.com had benefited from Chinese subsidies that could strengthen its ability to finance European activities and pursue aggressive pricing strategies. Regulators also found that the company's subsidized logistics and technology infrastructure could provide Ceconomy with advantages unavailable to rival retailers, according to the Commission's findings. The investigation included information submitted by the companies and feedback from competitors. Following a review of the proposed remedies, JD.com and Ceconomy strengthened their commitments on financing arrangements and third-party access to services, and the Commission concluded that the revised measures sufficiently addressed the competitive risks identified.
According to a company statement issued Tuesday, Ceconomy operates more than 1,000 stores across Europe and employs approximately 50,000 people.