EU accuses Temu of obstructing subsidy probe
EU accuses Temu of obstructing subsidy probe into foreign subsidies that distort competition in the internal market.
The European Commission (EC) has issued a Statement of Grounds (SoG) to Temu owner PDD Holdings and its Irish subsidiary WhaleCo, alleging obstruction of the Foreign Subsidies Regulation (FSR) inspection. The inspection was carried out at WhaleCo’s premises in Dublin from 2 to 5 December 2025, as part of a broader investigation into whether Temu received foreign subsidies that distort competition in the EU internal market.
PDD is a multinational retail and e-commerce group and operates Temu in the EU via WhaleCo. The EC said its preliminary view is that Temu did not actively cooperate during the inspection, which it said would amount to a breach of its procedural obligations.
Temu failed to meet several basic requests relating to the organisation and management of its European activities, the IT tools and systems used in the EU, and certain books and records connected to its EU business. These types of requests are customary in the early stages of a competition inspection.
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The absence of this information stopped the EC from examining sources that could be relevant to the investigation. Under the FSR, the EC can levy a fine of up to 1% of a company’s total turnover in the preceding business year for refusing to submit to an inspection or for supplying incomplete books and records.
The SoG outlines the basis on which the commission plans to build a decision. Temu is now entitled to review the commission’s file and submit a response before any final decision is made. The commission said the issuance of a SoG does not prejudge the outcome.
Temu has responded to the allegations, stating that it does not agree with the commission’s preliminary findings in its SoG. Temu claims it cooperated fully and complied with all the requests the commission made during the inspection.
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Temu also categorically denies having received any foreign subsidies that distort the internal market. The company will analyse and respond to the SoG and trust the commission will reconsider its position.
The latest development comes after the EC imposed a €200m ($233m) penalty on Temu in May under the Digital Services Act, saying the retailer had not properly assessed the risks associated with illegal products sold on its platform. Temu is also dealing with legal action in the US, including a petition filed by Iowa Attorney General Brenna Bird under the Iowa Consumer Fraud Act.
The process is separate from, but proceeding alongside, the main investigation into whether Temu received distortive foreign subsidies, which was the original reason for the inspection.
