JD.com/CECONOMY and Metro Lisbon: Takeaways From The Commission’s First Two FSR Decisions Concerning Chinese Companies

The European Commission’s (the Commission) latest decisions under the Foreign Subsidies Regulation (FSR) offer important insights into how the regime applies to Chinese companies. On 3 November 2026, the Commission conditionally approved JD.com’s acquisition of German electronics retailer CECONOMY, marking its third conditional clearance. The decision follows an in-depth FSR merger investigation and is the first involving a Chinese acquirer. Meanwhile, on 20 October 2026, the Commission finally published its first public in-depth decision under the FSR’s public procurement module, concerning Mota-Engil’s bid for the construction of Lisbon’s Violet metro line through a consortium involving a Chinese state-owned subcontractor.

In this blog post, we summarise the key takeaways from these two decisions, including the new insights into the Commission’s approach to identifying foreign subsidies, its assessment of possible distortive effects, and the tailored remedies it is prepared to accept. We consider what these developments mean for businesses, against the backdrop of growing FSR scrutiny of Chinese companies and multinationals with significant business interests in China, including how to navigate potential constraints arising from Chinese government blocking orders while preserving a path to FSR clearance, including through appropriate commitments where necessary.

A closer look at foreign subsidies and their distortive effects

In both decisions, the Commission focused on a number of possible foreign subsidies:

While we await the publication of the full JD.com/CECONOMY decision for further details, the information available so far already permits several noteworthy observations on the Commission’s approach. These include, in particular:

• Taxes: Tax-related measures form a routine part of most FSR proceedings, and both decisions highlight that the Commission is likely to treat tax measures as foreign subsidies even if they are widely applied and not particularly selective. In the Lisbon Metro decision, the Commission found that several Chinese tax measures were “specific”, even where eligibility criteria were set by law and potentially applied to a broad range of companies. These included the reduced 15% corporate income tax rate for High-Tech Enterprises (compared with the standard 25%), R&D pre-tax super-deductions and preferential tax rates for certain industries in western provinces of China. The Commission considered the measures selective because eligibility was restricted to particular companies or industries, or subject to administrative discretion. While this approach mirrors the Commission’s (disputed) approach to “selectivity” under EU State aid rules, it shows the Commission’s willingness to apply concepts tailored to the EU’s economic model outside the EU’s borders. Interestingly, the Commission assessed R&D pre-tax deductions separately from the remaining tax measures, focusing on the link between the deductions and the Chinese subcontractor’s group’s R&D capabilities. This demonstrates that when it comes to tax measures, the Commission looks not only at “value” but also at how the measure operates within the group and how it can impact the companies’ activities in the EU internal market.

• Preferential financing: The Commission’s focus on the terms of external financing in both decisions underscores the importance of loans to FSR proceedings. The Metro Lisbon decision also shows the difficulties companies may face in providing China-related data – as the Chinese subcontractor did not provide the requested information, the Commission based most of its loan-related assessment on public sources, including both the Chinese subcontractor’s own published accounts and other third-party sources (such as studies), as “facts available” and made its own inference of conferred benefits. It will be interesting to see how the Commission dealt with this issue in the JD.com/CECONOMY decision, in particular considering that Chinese authorities issued a blocking order in relation to the FSR proceeding.

• State guarantees: In Metro Lisbon, but not in JD.com/CECONOMY, the Commission found the existence of a de facto unlimited state guarantee, one of the “blacklist” Article 5 foreign financial contributions which are presumed to be highly distortive under the FSR. While both previous FSR conditional clearances under the M&A module focused on possible state guarantees based on questions around the application of ordinary insolvency laws to the investors, the Commission goes a step further here. Its assessment in Metro Lisbon is not based on any concrete legal obligations of the state to support the companies and does not mention insolvency laws at all but focuses primarily on financing conditions reflecting the market expectations of state support, manifested for example in credit rating reports. The Commission’s willingness to take this expansive approach leads to difficulties, both in terms of principle and the practical impact on businesses. It suggests that companies can be found to inadvertently receive a state guarantee based on market perceptions and expectations, giving companies no clear way to “refuse” such a guarantee or mitigate it through commitments. It is also unclear how the Commission will assess the moment when such guarantees are granted, weakening the legal certainty provided by the FSR’s strictly defined look-back periods.

• Provision of goods/services to public authorities: In Metro Lisbon, the Chinese subcontractor did not provide information on the pricing and award procedures behind the Chinese group's sales to one of the Chinese state-owned railway groups, arguing that the burden to prove “above market” prices should be on the Commission. The Commission rejected this argument, arguing that market conformity assessment requires information that only the company could provide. It instead invoked its power to decide “on the basis of the facts available” under Article 16 FSR – a power which is similar to EU State aid rules, but which has much broader application under the FSR. Relying on the facts available, including its own assertion that rail procurement in China is “not always transparent, done in a competitive way or based on market rules”, it concluded that the sales were possibly overpriced and may have included non-financial benefits such as guaranteed volumes, a liquidity buffer to absorb low-margin bids abroad, and economies of scale. This signals that, where a company withholds the relevant data, the Commission does not have to prove in detail that prices were above market to find a subsidy, but may rely on “facts available”, as well as the broader context of the contracts.

• Grants: In Metro Lisbon, the Commission also found that the Chinese subcontractor received foreign subsidies in the form of direct government grants. The Commission based its findings on facts available, primarily by combining accounting entries in the company’s financials with general assertions about the wider Chinese industrial policy. While there was no evidence that the grants were received by the Chinese subcontractor itself, the Commission concluded that it could not exclude that the grants were granted to other group companies that had both the possibility and the incentive to cross-subsidise the Chinese subcontractor’s participation in the tender. While direct grants also appear in the JD.com/CECONOMY clearance, the Commission’s press release offers little detail on their nature.

Beyond the types of subsidies identified, the two decisions also provide insight into how the Commission assesses their potential distortive effects on the EU internal market.

• In JD.com/CECONOMY, the concerns outlined in the Commission’s press release focus on the combined entity’s activities after the acquisition. The Commission found that subsidies had contributed to JD.com’s logistics and technology capabilities, which would become available to CECONOMY, and could strengthen the combined entity’s position in the internal market. As in the e&/PPF decision, the Commission did not find any distortions in the acquisition process, although it remains unclear until the full decision is published whether and how the Commission examined and dismissed such concerns.

• Metro Lisbon, meanwhile, provides the first insight into how the Commission assesses distortions in public procurement cases. The Commission examined whether subsidies received by the Chinese subcontractor enabled its Portuguese subsidiary to offer particularly favourable prices, allowing the whole consortium to submit an unduly advantageous tender. Its assessment focused on comparisons with competing offers, on whether the lower prices could be explained by genuine cost advantages or efficiencies, and on the potential for cross-subsidisation within the group. This last point is important: the Commission did not focus on actual transfers of the subsidies but instead assessed whether the company had the ability (e.g., due to a lack of internal ring-fencing) and incentive to cross-subsidise its activities. This approach creates further difficulties for businesses, as even innocuous and legitimate intra-group capital transfers could attract the Commission’s scrutiny.

Commitments are becoming more varied – and more tailored

The two decisions also show that the Commission is willing to accept tailored commitments to address the distortive effects of foreign subsidies, both in relation to the M&A and public procurement modules of the FSR regime.

• JD.com/CECONOMY: The three conditional FSR clearances issued under the M&A module to date largely imposed behavioural commitments. In the previous two conditional FSR clearances, the remedies included removing unlimited State guarantees, ring-fencing the acquired business from subsidised financing and granting third parties access to certain technologies. The JD.com/CECONOMY commitments combine these elements and include ring-fencing (by mandating that intra-group transactions, including financing, between JD.com and CECONOMY take place on market terms) and open-access commitments (by requiring JD.com to offer its warehousing, logistics and technology services to third parties on the same terms as those offered by JD.com to CECONOMY), subject to a duration of ten years and monitoring by an independent trustee under the Commission’s supervision. This mix is notable. The Commission is seeking to address the risk of cross-subsidisation by ensuring that CECONOMY has access to JD.com’s warehousing, logistics and technology services only on market terms. While this should remove any direct impact of the subsidies on CECONOMY’s position in the internal market, the Commission went even further, requiring JD.com to offer access to warehousing, logistics and technology services on those same terms to CECONOMY’s competitors. It suggests that the Commission was concerned about CECONOMY’s advantages from having exclusive access to JD.com’s infrastructure and services vis-à-vis competitors. Once the JD.com/CECONOMY decision is published, it will also be instructive to read the Commission’s reasoning for rejecting the original commitment proposal. Based on press reports, these seem to have included conflict-of-laws clauses in case Chinese laws prevented JD.com from complying with the remedies.

• Metro Lisbon illustrates a more structural approach to remedies under the FSR’s public procurement regime. Rather than relying merely on ongoing financing or access obligations, the Commission accepted the replacement of the investigated company with Polish rolling stock manufacturer PESA, alongside commitments governing subsequent changes to the consortium’s supply arrangements. This addressed the Commission’s concerns while allowing the consortium to remain eligible for the tender, subject to the contracting authority’s assessment of the revised bid.

In addition to the above developments, the Metro Lisbon case also provides the first indication of the Commission’s approach to the concept of a “main subcontractor” under the FSR public procurement regime. The Commission rejected the Chinese subcontractor’s argument that, in assessing whether a subcontractor or supplier qualifies as “main”, the qualitative criterion, i.e., whether its participation ensures the performance of key elements of the contract, and the quantitative criterion, i.e., whether the economic share of its contribution exceeds 20% of the value of the submitted tender, should be applied cumulatively. Instead, the Commission clarified that these are alternative criteria: a subcontractor or supplier may be considered “main” where either its participation ensures the performance of key elements of the contract or the economic share of its contribution exceeds 20% of the value of the submitted tender.

Navigating EU and Chinese regulatory requirements under the FSR

The two decisions also come against the backdrop of tensions between the EU and China over the application of the FSR, particularly where the Commission’s information requests intersect with Chinese legal restrictions on disclosure.

The Metro Lisbon decision illustrates the Commission’s approach where parties cannot provide the requested information. In its subsidy assessment, the Commission relied heavily on its power to “decide based on the facts available”. It focused on publicly available information, including financial statements, credit ratings, third-party studies and Chinese government policy documents. Interestingly, it also devoted a detailed section to China's broader industrial policies, including support for the international development of Chinese businesses, using this narrative as a backdrop to many of its assessments – mirroring its approaches in the merger control context.

It is unclear how this tension was resolved in JD.com/CECONOMY, especially in light of the August 2026 blocking order led China's Ministry of Justice, restricting cooperation with certain Commission investigative measures relating to the transaction. The fact that the Commission ultimately cleared the acquisition is an encouraging development for Chinese companies seeking to invest in the EU, but the Commission’s press release provides little insight into how the information-sharing difficulties were addressed or whether alternative arrangements were accepted.

Outlook and practical takeaways

The JD.com/CECONOMY and Metro Lisbon decisions confirm that FSR scrutiny should be an important consideration for businesses pursuing acquisitions, participating in public tenders, or merely conducting business in the EU. At the same time, navigating the FSR is not simply a compliance exercise: it increasingly requires strategic planning, commercial judgement and tailored solutions.

The Commission’s emerging practice provides greater clarity, but not necessarily greater predictability. The range of subsidies attracting scrutiny remains broad, while the remedies accepted so far show that FSR investigations can have lasting implications for how businesses operate. Companies should therefore consider FSR risks alongside the commercial rationale of their transactions and projects, rather than treating clearance as a separate regulatory hurdle. This is particularly important for businesses operating across jurisdictions, where conflicting information disclosure requirements and broader trade tensions may add further complexity.

In terms of practical takeaways:

• Look at subsidies across the whole group, not just the bidding or acquiring entity. The Commission does not need to show that a subsidy actually reached the company active in the EU. It is enough that the group could and would cross-subsidise, and that nothing showed the subsidy was ring-fenced. Where commercially feasible, groups should be ready to show that intra-group financing, guarantees and services are on market terms, and document any ring-fencing.

• Map your FFC exposure early and prepare your defence. The Metro Lisbon decision again demonstrates the risk of adverse inferences where the Commission has to rely on facts available, while also providing practical guidance for companies to identify potentially problematic FFCs and prepare targeted defences at an early stage. In particular, Chinese companies can use the risk indicators emerging from Metro Lisbon to map their FFC exposure, identify areas likely to attract Commission scrutiny, and prepare supporting evidence in advance of an FSR proceeding.

• In tenders, be mindful of your filing obligation as a “main subcontractor or supplier” and prepare to defend your price and your supply chain. Be mindful that a subcontractor or supplier may still qualify as “main” even if its contribution falls below the 20% threshold, where its participation ensures the performance of key elements of the contract. In substantive analysis, the Commission will test a low offer against competing bids and market benchmarks. General references to lower costs or efficiencies will not be enough without detailed, verifiable data. Bidders should also check the FSR risk of key subcontractors early, as replacing one may be the price of clearance.

• Consider what public sources say about your business. Where information is missing, the Commission will build its own picture from available information including annual reports, credit ratings and third-party studies. Statements made for investors or rating agencies can be misread in an FSR investigation. In Metro Lisbon, the company's own description of itself as a “low-risk” borrower made by one of its group companies was used as evidence of state backing. Review these sources before filing, so you keep control of the narrative.

• Plan for information-sharing and conflicting legal requirements as well as potentially long reviews. Identify disclosure restrictions early. If information cannot be provided, the Commission will rely on the facts available and may presume that a benefit exists. General claims that information cannot be provided will not be enough. At the same time, JD.com/CECONOMY shows that conflicting requirements across jurisdictions need not stop a transaction. It remains important to build sufficient time into the deal timeline to allow for a lengthy FSR review.

• Think creatively about remedies but weigh the commercial trade-offs. The Commission is open to tailored behavioural commitments that let transactions and tenders go ahead, from ring-fencing financing and opening up capabilities to competitors to replacing subcontractors. These commitments can bind for years. The key is to anticipate concerns early and design workable solutions that preserve as much commercial value as possible.

This article was originally published on: https://www.freshfields.com/en/our-thinking/blogs/transactions/jd-com-ceconomy-and-metro-lisbon-takeaways-from-the-commissions-first-two-fsr-d-102o899