• EC decision this week on whether to issue ‘statement of grounds’
• Adnoc and e& waived their rights to receive statement of grounds
• Formal charges could unlock more tailored remedy discussions

JD.com’s acquisition of German retail company Ceconomy is on the cusp of being the first deal to get formal charges from the European Commission (EC) in a Foreign Subsidies Regulation (FSR) review, according to two sources familiar with the matter.

The final decision on whether to serve the Chinese acquirer with a “statement of grounds” will be made this week, the sources added.

A statement of grounds is the FSR’s equivalent of the statement of objections in merger control reviews. It marks a formal escalation of the concerns the Commission has about a deal and is an essential procedural step should the EC decide to prohibit the deal.

The Commission opened an in-depth investigation into e-commerce giant JD.com’s EUR 2.4bn offer to acquire MediaMarkt’s owner on 28 May over concerns that Chinese subsidies received by JD.com may distort competition in the EU.

The deal parties have been engaged in remedy discussions with the Commission, but these are still far from satisfying the regulator’s misgivings, as reported by this news service.

Before Ceconomy/JD.com, the Commission already conducted two other Phase II FSR reviews, of the PPF/e& and Covestro/Adnoc deals, but in both cases the parties decided to waive their rights to require the EC to issue them a statement of grounds, to submit observations and to request access to the Commission’s file.

This time, the Commission might be looking to establish a precedent where more formal steps of the FSR Phase II are part of the procedure, according to one of the sources.

A statement of grounds would provide the companies with more clarity on the specific concerns the EC has with their deal, which could help them present a remedy package better suited to address those concerns, this source added.

The deadline for the Commission to decide on the case is 2 October. The deal has a hard long-stop date on 10 November.

The European Commission and Ceconomy declined to comment. JD.com did not reply to a request for comment.