The European Union is preparing an investigation on Temu

Problems continue with Brussels for the Chinese fast-retail sector, which will face an official investigation by the European Union in the coming days over allegations of selling illegal products on the platform. Last July, the EU had already stated its intention to impose heavier customs duties on low-cost imports, a proposal that would directly impact Temu, Shein, and AliExpress. Now, the European Commission is ready to take direct action against the e-commerce platform managed by China’s PDD Holdings Inc., with an investigation that could result in substantial economic sanctions for the company, with fines that could reach 6% of Temu’s annual global revenue. According to some sources, the European Commission is preparing to officially open proceedings, with the goal of verifying whether Temu is violating community regulations against illicit online activities. The formal investigation could begin in the coming days under the EU’s Digital Services Act, although timing may vary based on changes in the leadership of the Brussels executive branch. On October 11, the European Commission had already requested that the Chinese company provide information about Temu's actions to limit the sale of illegal products, along with its plan to protect the well-being and health of its consumers. A spokesperson for the Commission stated that Temu responded last Friday, and the responses are currently under review. However, it appears that the information provided by Temu's representatives was not thorough enough to alleviate the European Union’s concerns. In fact, a recent survey by the Financial Times reveals that 80% of toys sold on Temu and other online platforms were toxic or posed health risks to children.

The investigation comes at a time when the European Union is taking strong measures on online services and consumer protection. Already in 2022, the EU had approved the Digital Services Act, which grants the Commission broad powers to fine large online companies that fail to control illegal content on their platforms. The case against Temu is not the first investigation of this kind; indeed, since the beginning of the year, Brussels has launched other investigations into Meta, AliExpress, TikTok, and X. Concerns over Chinese fast retail had already been raised by the Commission earlier this year, when Temu was designated as a “Very Large Online Platform” and subjected to increased scrutiny. Alongside the fast-fashion retailer Shein, Temu was initially asked to provide more information on efforts to control the sale of illegal products as early as June. Although the investigation may seem like a strong move by the EU, proceedings can be stopped at any time if the company agrees to take concrete action against the sale of illegal products. However, from what has emerged so far from Brussels, the Chinese company has not been cooperative.