• First Chinese takeover to face FSR Phase II
• Company executives met EC this week
• Transaction subject to 10 November long-stop date

The European Commission (EC) is planning to open an in-depth investigation into JD.com’s acquisition of Germany’s Ceconomy under the Foreign Subsidies Regulation (FSR), according to two sources close to the matter.

The decision will be announced next week, when the EC’s 28 May deadline to conclude its preliminary investigation of the deal is due, the two sources said.

Beijing-based e-commerce platform JD.com would be the first Chinese bidder to be subject to an FSR Phase II merger review. The only two in-depth FSR merger reviews carried out so far have targeted takeovers by Adnoc and e&, both of which are based in the United Arab Emirates.

JD.com filed its proposed EUR 2.4bn equity value acquisition of electronics retailer Ceconomy for FSR approval on 17 April after approximately eight months of pre-notification talks with the enforcer.

Executives from JD.com and Ceconomy held a meeting with EC officials this week to discuss the case, the two sources said.

The deal has drawn criticism from the Dutch MEP Dirk Gotink, who said in a letter to the EC’s competition commissioner Teresa Ribera that it raises “structural concerns for European supply chains” and asked the Commission to carefully assess the existence of below-market financing, state guarantees or other preferential capital that would not be available to competitors on commercial markets.

JD.com said in an emailed statement that it remains “fully engaged in the ongoing FSR review process with the European Commission” and continues to view the process as constructive.

“We remain confident that the transaction supports Europe’s broader objectives around innovation and competitiveness,” the company said.

Ceconomy said in an emailed statement that this is “pure speculation, as an official announcement of the decision by the Commission is pending.”

The European Commission declined to comment.

The transaction has also encountered regulatory pushback in Austria, where the companies withdrew their notification under national Foreign Direct Investment (FDI) rules. The parties have yet to resubmit the deal for review, as reported by this news service. They are also in “constructive dialogue” with FDI authorities in Germany and Spain.

The deal has a hard long-stop date on 10 November, as per the deal documents.

The Commission has 90 working days after the start of an FSR in-depth investigation to take a decision. However, previous investigations into PPF/e& and Covestro/Adnoc were conditionally approved ahead of this deadline.