(Yicai) Aug. 20 -- China said the European Union’s investigation into Chinese e-commerce giant JD.Com under the bloc’s foreign subsidies regulation constitutes “unlawful extraterritorial jurisdiction,” adding that it will not allow any individual and organization to assist with the probe.

The EU’s use of the regulation to investigate JD.Com, specifically the arbitrary, cross-border requests for extensive and unnecessary information from within China about the Beijing-based company, imposes improper demands on the entities concerned and severely undermines the international rule of law, the Ministry of Justice said on its website yesterday.

JD.Com unveiled plans in July last year to buy Germany's Ceconomy, the parent firm of consumer electronics retailers MediaMarkt and Saturn, for EUR2.2 billion (USD2.6 billion). JD.Com formally notified the EU of the proposed acquisition this April.

The following month the European Commission announced an investigation into the deal after an initial review indicated that JD.Com may have received “foreign subsidies” from China, including preferential financing, tax incentives, and government grants, potentially distorting the EU’s internal market.

The EC issued a formal objection to JD.Com on July 22, with the initial review focusing on preferential financing, tax reductions, and financial subsidies. The review deadline is set for Oct. 2. If it is determined that there are foreign subsidies distorting the market, the EC may require JD.Com to make commitments and/or set conditions, or it may even block the deal.

This is the first time that a Chinese enterprise has faced this level of anti-subsidy scrutiny regarding a merger or acquisition in Europe since the bloc’s Foreign Subsidies Regulation entered into force in January 2023.

China’s justice ministry, working in cooperation with the ministry of commerce and other government departments, determined that the EU’s actions constitute “unlawful extraterritorial jurisdiction” per Chinese regulations, it said.

The ministry also said it hopes the European side will immediately correct its erroneous practices and cease the abuse of the "foreign subsidies" investigation tool to create a fair, just, and predictable market environment for enterprises investing and operating in Europe. It warned that if the EU continues to act unilaterally, China will take legal countermeasures.

Editor: Futura Costaglione