Brussels has charged Chinese online retailer Temu with failing to cooperate with investigators during an unannounced December raid on the company’s Dublin office, escalating a probe into whether it benefited from unfair foreign subsidies.
The European Commission said on Friday it had sent a statement of objections to Temu, a unit of PDD Holdings, over conduct during an inspection carried out between December 2 and December 5 at the e-commerce firm’s European headquarters. The case is being run under the bloc’s Foreign Subsidies Regulation (FSR), the EU’s main tool for policing financial support from governments outside the bloc that can distort competition in the single market.
Temu rejected the allegations. “Temu also categorically denies having received any foreign subsidies that distort the internal market,” the company said in a statement responding to the charges. It said it had cooperated with the inspection and disputed the Commission’s account of the raid.
The stakes are high. Under the FSR, companies that obstruct inspections or fail to cooperate can be fined up to 1 percent of their annual worldwide turnover, while substantive findings of distortive subsidies can carry penalties of up to 10 percent. Given Temu’s global sales, even the lower band could translate into fines running into the hundreds of millions of dollars.
The December raid was among the first inspections the Commission has carried out under the FSR against a major online marketplace. Regulators said at the time they were examining whether Chinese state support helped Temu undercut European rivals with rock-bottom prices on everything from clothing to electronics.
The case is part of a broader European crackdown on Chinese low-cost platforms. Brussels has separately hit Temu with a 200 million euro fine this year over illegal products sold on its marketplace, and it has tightened scrutiny of low-value parcel imports and of rival platforms such as Shein.
Legal observers say the non-cooperation charge is notable because obstruction cases are generally harder to defend than substantive subsidy claims, and because they set a precedent for future inspections of foreign-owned platforms. The FSR has been a priority for the Commission under competition chief Teresa Ribera, who has vowed to use the tool aggressively.
Temu now has the right to respond to the statement of objections and to request a hearing before the Commission adopts a final decision. Any eventual ruling can be challenged before the EU courts in Luxembourg.
Sources: Reuters, Devdiscourse (Reuters syndication), The Straits Times
Author: Europe Desk
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