EU accuses Temu of obstructing foreign subsidies investigation

11:33

By: Sahili Aya

EU accuses Temu of obstructing foreign subsidies investigation

The European Commission has issued preliminary allegations that Chinese online marketplace Temu failed to cooperate fully with an investigation into potential foreign subsidies, intensifying regulatory scrutiny of one of the world's fastest-growing e-commerce platforms.

According to the Commission, Temu allegedly obstructed inspectors during an inquiry launched under the European Union's Foreign Subsidies Regulation, legislation introduced in 2023 to address competitive distortions caused by financial support from non-EU governments.

The investigation follows inspections carried out in December at premises linked to Temu and its Irish subsidiary, Whaleco. European regulators are examining whether the company may have benefited from Chinese state subsidies that could have affected competition within the EU's single market.

The Commission claims that Temu did not adequately respond to requests for essential information during the inspection process. Regulators also allege that the company failed to provide several documents and business records relating to its activities in the European Union, actions that could constitute a breach of its obligations under the investigation.

Temu has firmly rejected the accusations, denying that it obstructed the inquiry and disputing the Commission's preliminary findings. The company maintains that it has acted appropriately throughout the regulatory process.

The case highlights the European Union's increasingly assertive approach toward foreign-backed companies operating within its market. Since the Foreign Subsidies Regulation entered into force, Brussels has expanded its oversight of businesses suspected of benefiting from state support that may give them an unfair competitive advantage over European rivals.

The Commission's findings remain preliminary, and the investigation will continue before any final decision or potential penalties are determined.