(Yicai) Aug. 20 -- The European Union's investigation into Chinese e-commerce giant JD.Com under its Foreign Subsidies Regulation constitutes unlawful extraterritorial jurisdiction, according to the Ministry of Justice of China.

The justice ministry, in cooperation with the Ministry of Commerce and other relevant departments, has determined that actions by the EU constitute unlawful extraterritorial jurisdiction measures in accordance with China's regulations, the MOJ said in a statement yesterday, adding that no organization or individual should comply with or assist in implementing such measures.

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

The preliminary review by the European Commission indicated that JD.Com may have received potential "foreign subsidies" from China, including preferential financing, tax incentives, and government funding, which are suspected of distorting the European market. On May 28, the EU launched an in-depth investigation into the acquisition under the FSR.

On July 22, the EC issued a formal objection notice to JD.Com, with the preliminary review focusing on preferential financing, tax reductions, and financial subsidies. The deadline for the review is set for Oct. 2.

If it is ultimately 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 directly block the transaction. This marks the first time a Chinese enterprise is facing such a level of counter-subsidy review in mergers and acquisitions in the EU since the implementation of the new FSR.

As the probe is under the FSR, it involves arbitrarily requesting extensive and unnecessary information from within China about JD.Com, which constitutes improper demands imposed on the company and represents a serious violation of the international rule of law, according to the MOJ.

The justice 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 then warned that if the European side continues to act unilaterally, China will resolutely take legal countermeasures.

Editor: Futura Costaglione