The European Commission on Friday accused the Chinese online giant Temu of failing to cooperate during a December raid on its European headquarters in Dublin.
On July 31, the European Commission, the EU’s executive body, said it was looking into Temu as part of an investigation into whether the company benefited from distorting foreign subsidies.
Temu is an online marketplace app that offers low-priced goods and has become hugely popular globally since its 2022 launch.
“The Commission preliminarily finds that Temu has infringed its duty to actively cooperate on multiple aspects related to the conduct of the inspection,” the Commission said in a statement.
Between Dec. 2 and Dec. 5 last year, under the EU's Foreign Subsidies Regulation, the Commission carried out an unannounced inspection at the office of Temu, a unit of PPD Holdings in Ireland.
In the EU, Chinese e-commerce giant PDD Holdings operates the e-commerce platform Temu through its subsidiary WhaleCo.
Foreign subsidies rules allow Brussels to address market distortions caused by financial support from non-EU governments, with the aim of preserving a level playing field for companies operating in the bloc.
The European Commission said that Temu, during the unannounced inspection, had failed to comply with routine requests for information on the organization and management of its EU operations, the IT systems it uses, and specific corporate books and records.
“Such requests are customary in a competition investigation and are typically made at the early stages of the inspection,” it said.
The withheld information, the Commission said, blocked it from reviewing sources potentially relevant to the case.
The charges could result in a fine of up to 1 percent of Temu's total annual turnover.
A Temu spokesperson told The Epoch Times by email that the company does not agree with the Commission's preliminary findings.
Temu said it “cooperated fully and complied with all the requests the Commission made during the inspection."
The company said it would respond formally and "trust the Commission will reconsider its position."
Temu also denied receiving foreign subsidies that distort the internal market, saying it generates “sustained cash flows from its own operating activities that are sufficient to fund Temu's operations in the EU.”
"We remain committed to continuing to cooperate with the Commission and comply with all our legal obligations under EU law," the spokesperson said.
“This is about risk management. It is very much a cornerstone of our [Digital Services Act],” Henna Virkkunen, the EU’s executive vice president for Tech Sovereignty, Security and Democracy, told reporters on May 28. “With this decision, we are sending a very strong message to Temu.”
The European Commission said at the time Temu had “failed to diligently identify, analyze, and assess the systemic risks of illegal products being offered on its platform and the resulting harm to consumers in the European Union.”
“Failing to conduct proper risk assessments—one of the cornerstones of the DSA’s architecture–is a particularly serious infringement of the DSA,” it added.
“Temu respects the objectives of the Digital Services Act and the need for clear, consistent rules across the digital economy. However, we disagree with the European Commission’s decision and consider the fine to be disproportionate,” Temu said in a statement emailed at the time to The Epoch Times.
“The decision relates to our first DSA assessment in 2024 and does not reflect the current state of our systems,” it said.
The Commission gave Temu until Aug. 28 to deliver an action plan, which will be assessed by the European Board for Digital Services.