EU charges Temu with obstructing December raid into possible Chinese state subsidies

The Commission's preliminary findings

The European Commission stated on Friday that it had charged Temu with infringing its duty to actively cooperate during an unannounced inspection carried out between December 2 and 5 at the company's European headquarters in Dublin. The inspection targeted Temu and its subsidiary Whaleco, both units of PDD Holdings, and was conducted under a 2023 EU regulation designed to counter unfair competition from foreign firms benefiting from state subsidies.

The Commission said Temu failed to provide information on the organisation and management of its EU activities, as well as on the IT tools and systems it uses. The statement noted that by not submitting the requested documents, the Commission was unable to examine information sources potentially relevant to its investigation.

The Commission preliminarily finds that Temu has infringed its duty to actively cooperate on multiple aspects related to the conduct of the inspection.

Temu's response

Temu rejected the allegations, insisting it had cooperated fully with all requests made during the inspection. A company spokesperson said Temu complied with every demand from the Commission and would review the Commission's statement carefully.

The company also categorically denied receiving any foreign subsidies that distort the EU internal market. Temu argued that its own operational activities generate sustained and sufficient cash flows to finance its EU operations, and that it does not rely on state support for any competitive advantage.

Temu has fully cooperated and fulfilled all requests made by the Commission during the inspection.

Potential penalties

If the Commission's preliminary findings are confirmed, Temu could face a fine for obstruction. In addition, should the underlying investigation conclude that Temu did receive illegal foreign subsidies, the company could be sanctioned up to 1% of its total annual turnover. Temu now has the opportunity to respond to the Commission's concerns before a final decision is reached.

Broader regulatory pressure

The obstruction charge is the latest in a series of regulatory actions against Temu in Europe. At the end of May, the Commission imposed a fine of 200 million euros on the company for allowing the distribution of illegal and dangerous products to European consumers via its platform. Temu is contesting that penalty.

The company has grown rapidly in the EU and now counts 130 million users across the bloc, roughly one-third of the EU population, making it one of the largest online retailers in Europe. In Germany, it ranks among the biggest e-commerce players. The Commission's separate investigation into whether Temu received distortive Chinese state funds remains ongoing.