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business/news//Reuters
The acquisition will allow one of China's largest retailers to expand outside its home market.
The EU opened its first in-depth probe of a Chinese deal under the Foreign Subsidies Regulation.
KEY POINTS
JD.com may have received Chinese state support in the form of financing, tax breaks, and grants.
These subsidies could have enabled JD.com to offer a higher purchase price for Ceconomy.
JD.com claims the Ceconomy acquisition will not use foreign subsidies but only private bank debt and cash.
The European Commission has set an October 2 deadline to decide on the acquisition approval.
The acquisition will allow one of China's largest retailers to expand outside its home market via Ceconomy-owned electronic products retailers MediaMarkt and Saturn.
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The decision by the European Commission marks its first in-depth probe of a Chinese deal under its Foreign Subsidies Regulation, which targets unfair foreign state aid and could require JD.com to offer concessions to address its concerns.
"The preliminary investigation indicates that JD.com may have received foreign subsidies distorting the EU internal market. These include preferential financing, tax incentives and grants provided by entities possibly attributable to the PRC," the EU executive said.
It said these potential subsidies might have helped JD.com offer a higher price for Ceconomy and to support the German company's activities and growth through JD.com's technological and logistics capabilities that could distort the EU market.
JD.com disputed the EU's concerns.
"The proposed acquisition of CECONOMY AG by JD.COM will not be financed by any foreign subsidies granted by China or any other non-EU Member State, but instead is funded by external private bank debt and available cash from ordinary course business activities," it said in a statement.
The Commission set an October 2 deadline for its decision.
Reporting by Foo Yun Chee Editing by Tomasz Janowski