EU lawmaker urges deeper probe into JD.com’s Ceconomy takeover, warning of “serious” risks to competition, data security and supply chains.
Chinese e-commerce company JD.com’s acquisition of electronics retailer Ceconomy needs “thorough” investigation by EU foreign subsidy regulators, a lawmaker has warned the bloc’s competition chief.
Dirk Gotink, a Dutch politician in the European Parliament, said the deal posed “serious uncertainties” about Chinese state support distorting competition, about data protection, and over the resilience of EU supply chains.
“This case represents a critical test of the [EU]'s ability to ensure that openness to investment is matched by robust safeguards for consumers and the integrity of the internal market,”
he said in the letter last week to Teresa Ribera, and seen by MLex.
JD.com announced its purchase of Ceconomy, which owns 1,000 stores in 11 countries through the MediaMarkt and Saturn chains, last July. The Chinese retailer has already received all the required merger approvals, but still awaits clearance under the EU’s Foreign Subsidies Regulation and certain foreign direct investment approvals.
Under the FSR, the European Commission checks that subsidies from non-EU countries don’t distort competition on the bloc’s market, by giving their recipients an unfair advantage to acquire companies or to win public procurement contracts.
In his letter to Ribera, Gotink said the deal “cannot be assessed solely through the lens of classical competition policy, as it raises systemic questions about consumer protection, data security and the resilience of the internal market for decades to come.”
JD.com is already a giant global player with annual sales of €140 billion ($165 billion), Gotink said. Acquiring Ceconomy would allow it to rapidly establish itself on the European market with a single platform across the sourcing of Chinese-made products, logistics, distribution and the collection of data, he said.
“Over time, this will progressively displace independent European actors, concentrating market power and eroding supply chain resilience, raising serious economic security concerns for the Union.”
“The acquisition would hand a non-EU actor control over a major European distribution network for electronics and digital goods,” he said. “Combined with JD.com's integrated logistics model, this risks creating structural dependencies over the supply of key products within the Union, raising direct economic security concerns.”
Gotink said the commission needed to carefully assess the possibility of Chinese state-backed financial support leading to anticompetitive financing, state guarantees or preferential rates of capital not available to rivals.
JD.com received approval from Germany’s competition authority last September. The Bundeskartellamt said its powers were limited only to the competition effects of the deal and that JD.com was active “only to a very limited extent” in Germany.
However last month Ceconomy warned the deal may not close in the first half of the year, as planned, due to delays in obtaining foreign investment clearance in Austria.
“JD.com has already made clear commitments regarding locations, jobs, data protection and management independence when the transaction was announced and has offered extensive additional remedies to the Austrian investment control authority,”
Ceconomy said.
“With the remedies offered by JD.com and Ceconomy, MediaMarkt’s future data protection policy would resemble that of an aerospace company. This goes far beyond what is customary for a retail company,”
said a company official in a press release.
Source: MLex
