European Temu Offices Searched
Temu's European branches have been searched. The reason is the suspicion of illegal foreign subsidies.
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Temu's European branches were searched last week by investigators on behalf of the European Commission. This is reported by Reuters, citing an insider. The EU Commission indirectly confirms this, without naming the Chinese retail platform.
"We can confirm that the Commission has carried out an unannounced inspection at the premises of a company active in online retail in the EU," a spokesperson told the news agency, "under the regulation on third-country subsidies distorting the internal market." From this, it can be inferred that the EU Commission suspects that Temu is being improperly subsidized by the People's Republic of China.
In parallel, the EU Commission accuses Temu of insufficiently complying with its obligations under the Digital Services Act (DSA). An investigation has shown a high risk of illegal products. The German Bundeskartellamt is also investigating Temu. This concerns the conditions used on the online marketplace for Germany for traders, as well as Temu's actual behavior towards traders. These could, it is feared, raise the general price level harming consumers.
Foreign Subsidies Regulation has been in effect since 2023
Such subsidies can give a company an advantage in competition. For example, artificially low prices could push other providers who are not subsidized out of the market. State subsidies can also be used directly to eliminate competitors by financing the takeover of other companies.
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Such distortions not only cost jobs and reduce tax revenue, but can also harm consumers eventually. Because once the subsidized company has achieved significant market power, it can raise prices without fearing losing much business to strong competitors, because they no longer exist. As a countermeasure, the EU Regulation on third-country subsidies distorting the internal market (Foreign Subsidies Regulation, FSR) came into force in mid-2023.
heise online asked Temu what subsidies it receives, since when it has been aware of the investigation, and how it is reacting to the investigation and the house search. The company itself does not act as a seller, but operates its website as a platform for third parties. Temu belongs to the Chinese Pinduoduo group (PDD Holdings).
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