**Temu Defends EU Operations Amid Regulatory Scrutiny**
Temu, the online retail platform, has publicly refuted allegations from the European Commission regarding its compliance during a recent inspection at its European headquarters. The Commission has accused Temu of not fully cooperating during an unannounced inspection conducted from December 2 to 5, 2025, at the premises of its subsidiary, WhaleCo Technology Limited, in Dublin.
In response to the Commission's concerns, Temu's parent company, PDD Holdings, stated that it has not received any foreign subsidies that would provide it with an unfair competitive advantage in the European market. The Commission's allegations are part of a broader investigation into potential foreign subsidies that could distort competition within the European Union's internal market. However, the Statement of Grounds issued to Temu does not imply that the company has been found guilty of receiving such subsidies; rather, it focuses on the company's conduct during the inspection process.
Temu has expressed disagreement with the Commission's preliminary conclusions and maintains that it has cooperated fully with investigators, responding to all requests made during the inspection. The company plans to review the Statement of Grounds and submit a formal response, asserting its confidence that the Commission will reconsider its stance.
In its defense, Temu emphasized that it generates sufficient cash flows from its operational activities to support its EU operations without relying on external state subsidies. "We do not need to count on ‘foreign subsidies’ to fund any competitive activities or to create any competitive advantage in the internal market," the company stated.
The European Commission's preliminary findings suggest that Temu did not comply with several requests regarding the organization and management of its EU activities, including the IT systems utilized and specific business records. The Commission indicated that the absence of this information hindered their ability to investigate potential sources relevant to the subsidy inquiry.
Should the Commission confirm its findings, Temu's alleged failure to cooperate could result in a breach of procedural obligations under the Foreign Subsidies Regulation, which was implemented in July 2023. This regulation allows the Commission to scrutinize financial support from non-EU governments that may provide companies with an unfair advantage in the EU market. If found in violation, Temu could face a fine of up to 1% of PDD Holdings' annual global turnover.
This regulatory scrutiny comes on the heels of another significant issue for Temu. In May, the European Commission imposed a €200 million fine on the platform for inadequately assessing the risks associated with illegal and dangerous goods being sold to European consumers.
Temu's operations have also raised concerns in Cyprus, where the platform has a substantial customer base. During the first half of July, over 100,000 parcels, encompassing around 400,000 different product categories, were delivered to the island, despite the introduction of a new €3 customs duty by the EU. These transactions generated approximately €1.2 million in customs charges, with monthly parcel orders projected to reach between 200,000 and 250,000.
In 2024, the Consumer Protection Service in Cyprus took action by publishing a list of recalled toys sold through Temu, urging consumers to stop using the affected products immediately. This incident highlights ongoing concerns regarding product safety and compliance within the platform's offerings.
Despite the challenges, Temu has reiterated its commitment to cooperating with the European Commission and adhering to all legal obligations under EU law. The company aims to navigate the regulatory landscape while maintaining its operational integrity and commitment to fair competition in the European market. As the investigation continues, the outcome will be closely monitored by both regulatory authorities and consumers alike.