EU backs Chinese bid for Europe's largest consumer electronics stores

The European Commission on Tuesday approved the planned takeover of Europe's largest consumer electronics retailers MediaMarkt and Saturn, and their parent company, by Chinese e-commerce giant JD.com, subject to certain conditions.

MediaMarkt and Saturn are Germany's best-known consumer electronics retailers, selling household appliances, computers and smartphones. The joint company - CECONOMY based in Dusseldorf - forms Europe's largest specialist electronics retailer.

The investigation was carried out under the European Union's foreign subsidies regulation, due to concerns that Chinese state aid provided to JD.com could negatively impact EU businesses.

The commission approved the takeover, on condition that CECONOMY and JD.com fully comply with commitments offered by the companies.

The probe concluded that "identified foreign subsidies could lead to a potential distortion of competition in the EU internal market" but said that commitments offered by JD.com and CECONOMY "fully and effectively remedy the distortion," the commission said in a press release.

According to the commission, JD.com benefitted from preferential financing, tax incentives and grants from China.

"The identified foreign subsidies contributed to logistic and technological capabilities that would be provided to CECONOMY after the transaction" and could help it "engage in aggressive pricing to the detriment of other market participants," the commission said.

As remedies, the two companies offered to conduct intra-group transactions on market terms, including financing provided by JD.com to CECONOMY.

In addition, they committed to providing JD.com's warehousing, logistics and technology services to other retailers on the same terms as provided to CECONOMY.

The Chinese online retailer's offer values CECONOMY at around €2.2 billion ($2.46 billion).

China threatened the EU with retaliatory measures in August over the investigation.

The EU's foreign subsidies regulation aims to address distortions, ensuring a level playing field for all companies operating in the bloc.

Scrutiny in the EU applies to large companies that have received at least €50 million in foreign subsidies in the three years leading up to a merger.