Temu Under EU Scrutiny: Dublin Offices Searched Over Competition Concerns

Search of Temu’s Dublin headquarters. European Union (EU) regulators last week ordered a search of Temu’s headquarters in the Irish capital, Reuters reports. The move comes at a time of heightened concern from both European authorities and the retail sector’s own companies that are witnessing a massive influx of low-priced imports from China.

These shipments benefit from the customs exemption for packages of less than €150. An advantage for companies such as Shein or Temu that the EU executive wants to eliminate by the end of 2026, but which in the meantime gives them an “unfair advantage”, as denounced by retail trade associations in Europe.

The Foreign Subsidies Regulation (FSR) is the European Commission’s instrument to combat unfair state aid granted to foreign companies, with the intention of curbing competition from non-EU companies that are subsidized by their governments. The Commission can impose fines of up to 10% of a company’s aggregate annual turnover for infringements.

The EU may impose fines of up to 10% of a company’s aggregate annual turnover for unfair competition infringements

“We can confirm that the Commission has carried out an unannounced inspection at the premises of a company active in the e-commerce sector in the EU under the FSR,“ said a spokesperson for the EU executive.

This is not Temu’s first file with the European authorities. The Commission last year opened an investigation into Temu under the Digital Services Act (DSA), which regulates online platforms, and in July announced in its preliminary findings that Temu “is not doing enough to prevent the sale of illegal products through its platform.“

In Spain, the association that brings together the majority of retail companies, La Distribución-Anged, has expressed its concern about the rise of this type of Asian companies that “break the rules of the game”. Last November 26, in the middle of the Black Friday campaign, its president, Matilde García Duarte, claimed the need for European companies to be able to compete with the “same rules of the game” as the Asian platforms have. “It is producing a total imbalance and a breakage of the level playing field and ends up being a burden of costs and requirements for European companies.“

The European Commission wants to remove the tax exemption for the 4.6 billion parcels under €150 entering Europe from Asia by the end of 2026

According to data from La Distribución-Anged, 4.6 billion packages under 150 euros enter Europe every year. With the current legislation, all of them are exempt from paying tariffs, which allows the massive entry of these goods into the EU with a cost structure considerably lower than that of any European company subject to traditional import and distribution. The commission intends to end this advantage for cheap imports within a year.

Pending this legislative change in the EU, China’s trade surplus surpassed $1 trillion for the first time in November, with manufacturers redirecting more products to non-U.S. markets due to tariffs, which has fueled a boom in exports to Europe, Australia and Southeast Asia.