EU regulators have carried out an unannounced inspection at Temu’s European headquarters in Dublin as part of an investigation into whether the Chinese-owned online marketplace has benefited from state subsidies that could distort competition in the single market.
The move marks one of the most high-profile uses to date of the EU’s new Foreign Subsidies Regulation (FSR).
The European Commission confirmed that officials had conducted a surprise inspection at the premises of a company active in the EU e-commerce sector under the FSR, but did not name the business or the location. People familiar with the matter identified the target as Temu’s Irish facility, which serves as the platform’s regional hub.
Temu is a subsidiary of PDD Holdings, the Chinese group behind the domestic shopping app Pinduoduo. The Brussels inquiry is examining whether the platform has received financial support from Chinese public authorities – for example preferential loans, tax breaks or other below-market financing – that might give it an advantage over rivals in the EU.
The inspection comes amid wider political and regulatory concern over the rapid growth of low-cost imports from Chinese online platforms such as Temu and Shein. For years, parcels valued at under €150 entering the EU have been exempt from customs duties, a relief that national retailers say has allowed foreign platforms to ship vast quantities of small consignments into the bloc while keeping prices very low. EU finance ministers have now agreed to abolish the €150 duty-free threshold from 2026.
Since its launch in the United States in 2022 and in the EU in 2023, Temu has built a large customer base by offering a wide range of goods – from smartphones and household textiles to clothing and accessories – at prices that often undercut established competitors. The company reports around 116 million average monthly users in the EU, reflecting the speed of its expansion in the region.
The Dublin raid is not Temu’s first encounter with EU regulators. In October 2024 the Commission opened formal proceedings under the Digital Services Act (DSA) to assess whether the platform had breached online-platform rules, including obligations related to the sale of illegal products and the transparency of recommender systems. In July this year Brussels set out preliminary findings that Temu was not doing enough to prevent the sale of illegal goods, an investigation that could ultimately lead to fines of up to 6 per cent of the company’s global annual turnover if infringements are confirmed.
The Foreign Subsidies Regulation, which has applied in full since 2023, gives the Commission powers broadly comparable to its competition and state-aid enforcement tools. Officials may launch ex officio investigations, demand detailed information about foreign financial contributions, and carry out on-site inspections in the EU and, with consent, in third countries. If the Commission concludes that a foreign subsidy distorts the internal market, it can impose redressive measures, accept commitments, or prohibit certain transactions. Fines for serious breaches of notification or standstill obligations can reach up to 10 per cent of a company’s worldwide turnover.
Unannounced inspections are described by the Commission as a preliminary investigative step rather than proof of wrongdoing. They are typically used when regulators have indications – from market intelligence, whistleblowers or their own analysis – that a company may be in breach of EU rules. The authority stresses that the outcome of such checks may range from closing a case with no action to imposing commitments or sanctions following a formal decision.
Temu did not immediately respond to requests for comment following reports of the Dublin raid. Beijing has previously defended the international expansion of Chinese e-commerce platforms in general terms, arguing that they offer consumers cheaper products and reflect normal market competition, while EU institutions and business groups have pointed to concerns about product safety, tax compliance and the impact on domestic retailers.
The action against Temu forms part of a broader EU effort to address what policymakers describe as distortive trade practices linked to China’s growing global export surplus, which recently exceeded $1 trillion. Brussels has already launched anti-subsidy investigations into sectors including electric vehicles and renewable-energy equipment, alongside the planned customs changes for low-value parcels.
For now, Temu’s operations in the EU continue while the foreign-subsidy probe proceeds. The Commission has not indicated when it might decide whether to open an in-depth investigation or what remedies it could seek. The case will be watched closely by both European retailers, who argue that enforcement of the FSR is essential to ensure fair competition in online trade, and other foreign platforms whose business models similarly rely on shipping large volumes of low-value goods into the single market.
