China orders firms to shun EU probe into JD.com Ceconomy bid

China has barred its companies from cooperating with a European Union investigation into JD.com's proposed acquisition of the German electronics retailer Ceconomy, turning what was already a contentious takeover bid into a direct confrontation between Brussels and Beijing over the reach of European competition law.

The move, ordered by China's Ministry of Commerce, means that any Chinese entity or individual approached by EU investigators for evidence must seek explicit government approval before responding. The directive applies to the Commission's probe under the Foreign Subsidies Regulation, which gives Brussels the power to scrutinise and potentially block acquisitions where foreign state backing distorts the EU's internal market.

The bid that triggered a regulatory standoff

JD.com, one of China's largest e-commerce groups, announced its intention to acquire Ceconomy for EUR 2.2 billion. Ceconomy is no niche player: it owns MediaMarkt and Saturn, the consumer electronics chains that occupy prominent positions in Germany, Spain, Italy, and several other European markets. The deal would give JD.com a physical retail footprint across the EU, something no Chinese platform of comparable scale has achieved.

The European Commission opened an in-depth investigation in May 2026. Its concern, broadly stated, is that JD.com's ability to offer a premium for Ceconomy was not the product of competitive strength alone but was facilitated by subsidies from the Chinese state. Under the FSR, the Commission can demand details of financial backing from foreign governments, assess whether that backing confers an unfair advantage over European rivals, and, if it finds distortion, impose remedies or block the transaction outright.

Brussels suspects that non-market capital, directed or supported by Beijing, enabled JD.com to outbid competitors for a company that anchors much of Europe's consumer electronics retail. If the Commission finds evidence of distortive subsidies, it could force divestiture or impose behavioural conditions that would make the acquisition commercially unattractive.

Beijing's blocking statute escalates the dispute

China's response has been blunt. The Ministry of Commerce condemned the EU investigation as unjust and an overreach of jurisdiction. More consequentially, it invoked Chinese blocking statutes that prohibit domestic firms and individuals from providing documents, data, or testimony to foreign regulators without prior government approval.

The practical effect is immediate. EU investigators who would normally request financial records, correspondence, and internal assessments from Chinese entities connected to JD.com now face a wall of legal silence. Companies contacted by the Commission's case team must choose between complying with Brussels and risking penalties in China, or obeying Beijing and facing obstruction or non-cooperation findings in the EU.

This is not a novel tactic. Beijing has used blocking statutes before, most notably in antitrust cases involving foreign regulators. The United States and the EU itself maintain similar blocking mechanisms: the EU's own blocking statute, Regulation 2271/96, was designed to protect European companies from complying with US sanctions law. What is new is the scale and the context: this is the first time China has deployed such measures against an EU regulatory investigation under the FSR, a tool Brussels has held for only three years.

Why the Foreign Subsidies Regulation matters

The Foreign Subsidies Regulation entered into force in January 2023, with notification obligations for concentrations taking effect from October that year. It was designed to close a gap in EU law. Until the FSR, Brussels could scrutinise mergers on competition grounds and screen foreign direct investment on security grounds, but it had no instrument to address the possibility that a foreign bidder's financial muscle came from state subsidies rather than commercial success.

The regulation requires companies to notify the Commission of planned acquisitions that meet certain turnover thresholds, and it empowers the Commission to investigate whether foreign financial contributions, whether direct grants, favourable loans, tax exemptions, or other forms of state support, have distorted the EU market. The Ceconomy case is the first in-depth investigation under the FSR to reach this level of confrontation with a foreign government.

The legal paradox for multinationals

The blocking statute creates an unenviable position for companies with operations in both China and the EU. A Chinese supplier to JD.com, for instance, cannot lawfully provide documents to the Commission without Beijing's blessing. A European company with Chinese subsidiaries faces the same conflict in reverse: its Chinese arm cannot comply with an EU information request, while its European head office cannot afford to appear uncooperative.

Legal advisers in Brussels and Beijing are already mapping the consequences. Under the FSR, the Commission can impose fines of up to 1 per cent of a company's aggregate turnover for providing incorrect, incomplete, or misleading information, and up to 10 per cent for repeated obstruction. Under Chinese law, unauthorised compliance with foreign regulatory requests can result in fines, asset freezes, and restrictions on doing business in China. There is no middle ground that satisfies both regimes simultaneously.

What the Ceconomy deal represents

Ceconomy, headquartered in Düsseldorf, operates more than 1,000 stores across Europe under the MediaMarkt and Saturn brands. It is the dominant consumer electronics retailer in several EU markets. For JD.com, acquiring it would mean instant access to European consumers through established physical infrastructure, complementing the group's existing online operations in Asia.

For European competitors, the concern is straightforward. If JD.com's bid is backed by subsidised capital, the Chinese group can afford to pay more for Ceconomy than any unsubsidised rival, and can subsequently price aggressively in ways that European retailers, answerable to private shareholders and bound by stricter state-aid rules, cannot match. The Commission's argument is precisely this: that foreign state subsidies allow a bidder to outpay and outprice competitors who lack similar backing.

The counter-argument, advanced by Beijing and by JD.com, is that the company's financial strength derives from its commercial success in China's domestic market, not from state handouts. JD.com is publicly listed, with institutional investors holding significant stakes. The firm has not, however, disclosed the full extent of its dealings with Chinese state banks and regional development funds, and it is precisely this opacity that the Commission's investigation was designed to penetrate.

A precedent for future investment

The Ceconomy investigation will not be the last. The Commission has already opened FSR inquiries into other sectors, including public procurement bids for solar panels and electric vehicles. Each case tests the same question: can the EU enforce its subsidy rules when the foreign government in question refuses to cooperate?

The outcome here will shape Chinese investment in Europe for years. If Brussels blocks the deal and Beijing's blocking statute proves an insufficient shield, Chinese firms may reconsider whether bidding for European assets is worth the regulatory exposure. If the Commission is forced to back down or reach a weak settlement because it cannot obtain evidence, the FSR will look like a paper tiger, and European governments will face domestic pressure to find other ways to protect strategic industries.

Germany's position is particularly awkward. Ceconomy is a German company, and the German government has historically favoured open investment, particularly from China, which is a major market for German automotive and industrial exports. Berlin has also been wary of measures that might provoke retaliatory restrictions on German firms operating in China. The Commission, by contrast, is pursuing a more assertive line, reflecting a broader shift in EU policy toward treating economic dependency on China as a systemic risk.

What happens now

The Commission's next step is to decide whether it can build a case on the evidence available, or whether Chinese non-cooperation makes that impossible. Under the FSR, Brussels may draw adverse inferences from a party's failure to provide requested information, a provision designed precisely for situations where a foreign government obstructs an investigation. But adverse inferences are easier to assert than to defend before the General Court in Luxembourg, where any eventual Commission decision will almost certainly be challenged.

The Commission has 90 working days from opening an in-depth investigation to reach a decision, though it can extend this by 25 working days if JD.com offers remedies. That timeline puts the deadline for a final ruling in early 2027. Until then, the deal cannot proceed.

The deeper question is whether the FSR, as currently drafted, is workable when the foreign state in question actively prevents cooperation. If the Commission concludes that it cannot obtain the evidence it needs, it may be forced to seek legislative amendments that give it stronger powers of inference, or it may lean more heavily on national security-based investment screening, which operates under different legal foundations and does not require the same evidentiary standard.