EU Sends Statement of Grounds to Temu Over Possible Obstruction

• The European Commission has sent a Statement of Grounds to Temu's owner PDD Holdings Inc. and its subsidiary WhaleCo Technology Limited over allegations of obstruction.
• The investigation is focused on potential breaches of the Foreign Subsidies Regulation, which aims to prevent foreign companies from distorting competition in the EU.
• If found guilty, PDD Holdings Inc. and WhaleCo Technology Limited could face significant fines and reputational damage.

The Commission's move marks a significant escalation in its efforts to enforce EU laws and regulations on foreign companies operating within the bloc.

The European Commission has initiated a formal investigation into Temu, a subsidiary of PDD Holdings Inc. and WhaleCo Technology Limited, over allegations that they obstructed an inspection at WhaleCo's premises in Ireland. The Commission's Statement of Grounds, sent to PDD and WhaleCo on July 31, 2026, outlines the concerns and provides a detailed account of the events leading up to the alleged obstruction. According to the document, the inspection was part of a broader investigation into potential breaches of the Foreign Subsidies Regulation. The Commission's move marks a significant escalation in its efforts to enforce EU laws and regulations on foreign companies operating within the bloc.

The Foreign Subsidies Regulation, which came into effect in 2023, aims to prevent foreign companies from distorting competition in the EU through unfair subsidies. The regulation empowers the European Commission to investigate and impose penalties on companies that fail to comply with its provisions. In this case, the Commission's investigation is focused on whether Temu's owners obstructed an inspection at WhaleCo's premises, which could be seen as a deliberate attempt to evade scrutiny. If found guilty, PDD Holdings Inc. and WhaleCo Technology Limited could face significant fines and reputational damage.

The European Commission's investigation into Temu sends a clear signal that EU authorities will not tolerate obstruction of inspections or attempts to evade regulatory scrutiny. This development has important implications for companies operating in the EU, particularly those with foreign ownership or subsidiaries. Lawyers advising clients on EU market access should be aware of the potential compliance exposures arising from this investigation and take steps to ensure their clients are in full compliance with EU laws and regulations. The outcome of this case may also set a precedent for enforcement actions under the Foreign Subsidies Regulation, making it essential for companies to review their practices and procedures to avoid similar issues in the future.

Lawyers advising clients on EU market access should watch for potential compliance exposures arising from the European Commission's investigation into Temu, which may set a precedent for enforcement actions under the Foreign Subsidies Regulation.

Source: Original reporting via European Commission Press release