The European Commission has formally accused Temu of failing to cooperate during a surprise inspection carried out at its Dublin offices in early December 2025. The probe, led by the EU's competition authority, is examining whether the Chinese-owned online marketplace received subsidies that could distort competition in the single market.
In a statement released on Friday, the Commission said it "preliminarily finds that Temu has infringed its duty to actively cooperate on multiple aspects related to the conduct of the inspection" at the premises of WhaleCo, Temu's Irish subsidiary. The inspection was part of a broader investigation into whether Temu benefited from "potentially distortive foreign subsidies" that give it an unfair advantage over European rivals.
According to Brussels, Temu did not provide information related to the organisation and management of its activities in the EU, nor did it grant access to the IT tools and systems used for those operations. The company also failed to hand over specific books and records concerning its European business.
"Not providing the information prevented the commission from reviewing sources of information that could be relevant for its investigation," the EU executive said. The accusation relates solely to the December inspections, and Temu now has the right to respond to the Commission's concerns before any further action is taken.
Temu rejects the allegations
Temu has strongly denied the EU's findings. In a statement, the company said it "cooperated fully and complied with all the requests the commission made during the inspection" and that it would analyse the Commission's claim in detail. Temu also "categorically" denied receiving unfair foreign subsidies, arguing that its operations in Europe are funded by its own cash flows.
"Temu is committed to fair competition. The company generates sustained cash flows from its own operating activities that are sufficient to fund Temu's operations in the EU," the company said.
The case adds to a growing list of regulatory challenges for Temu, which has expanded rapidly across Europe since its launch in 2022. The platform, owned by Chinese e-commerce giant PDD Holdings, has faced scrutiny over product safety, labour practices, and now subsidy rules. The EU's Foreign Subsidies Regulation, which came into force in 2023, gives the Commission powers to investigate companies that receive financial support from non-EU governments and that could distort the internal market.
Ireland, where Temu has established its European headquarters, has become a focal point for the Commission's enforcement efforts. The country's role as a hub for global tech firms has drawn repeated attention from regulators, and this latest dispute underscores the tensions between Brussels and major digital platforms operating from Irish soil. Ireland's EU presidency has also highlighted the delicate balance between attracting foreign investment and upholding EU rules.
The Commission's decision to pursue Temu reflects a broader push to ensure that non-European companies play by the same rules as their EU counterparts. Similar investigations have been launched into other Chinese firms, including wind turbine manufacturers and solar panel producers, under the same subsidy regulation.
Legal experts note that the obstruction accusation is significant because it could lead to fines or other penalties independent of the underlying subsidy probe. Under EU rules, companies that fail to cooperate during inspections can face fines of up to 1% of their annual turnover, as well as periodic penalty payments.
Temu's response will be closely watched by both regulators and competitors. The company has argued that its low prices and efficient supply chain are the result of legitimate business practices, not state support. However, the Commission's preliminary findings suggest that officials believe Temu has not been transparent about its operations.
The case also raises questions about the effectiveness of surprise inspections in the digital age, where much of a company's data is stored in cloud systems that may be located outside the EU. The Commission has previously called for greater cooperation from tech firms during such raids, and this dispute could prompt calls for updated procedures.
For now, Temu has until the Commission's deadline to submit its response. If the EU's concerns are not resolved, the case could escalate to a formal decision, potentially including fines and orders to change business practices. The outcome will be a test of the EU's ability to enforce its rules on global e-commerce giants.
