China blocks firms from aiding EU’s JD.com probe as regulatory clash deepens

Beijing has banned Chinese entities from assisting with a European Union investigation into e-commerce giant JD.com under the bloc’s foreign subsidies regulation (FSR).

A statement from China’s Ministry of Justice on Wednesday condemned the probe as “undue extraterritorial jurisdiction measures”, ordering that “no organisation or individual may execute or assist in the execution”.

In May, the European Commission opened an in-depth investigation to assess whether JD.com’s proposed takeover of German retailer Ceconomy would “distort the EU internal market” because of the Chinese company’s alleged receipt of state subsidies.

It marked the latest in a succession of inquiries opened under the FSR, a competition sector tool that requires companies under investigation to hand over reams of information within short deadlines.

While Brussels is currently expanding efforts to tackle the impact of Chinese subsidies on its external trade balance, the FSR is aimed at countering the effect of subsidies caused by firms already present in the EU market.

This is the second time Beijing has used a blocking order to ensure entities do not comply with such a probe, having issued a similar decree with regard to a case centred on airport scanner maker Nuctech in May.

Chinese companies affected have complained loudly about the nature of information they are required to share. In this regard, the FSR has become an example of how difficult it is for businesses to comply simultaneously with sharpening regulations in both the EU and China.

South China Morning Post