Commission sends Statement of Grounds to Temu over possible obstruction of inspection under the Foreign Subsidies Regulation

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The European Commission has sent a Statement of Grounds to Temu’s owner PDD Holdings Inc. (‘PDD’) and its subsidiary WhaleCo Technology Limited (‘Whaleco’), outlining concerns that they may have obstructed an inspection at WhaleCo’s premises in Ireland.

The Statement of Grounds follows an unannounced inspection under the Foreign Subsidies Regulation (‘FSR’), carried out between 2 and 5 December 2025. The Commission conducted the inspections following indications that Temu may have received foreign subsidies that distort the internal market. The aim of the inspection was to gather evidence in support of its investigation into potentially distortive foreign subsidies granted to Temu.

PDD is a multinational group active in the retail and e-commerce sector. In the EU it operates the e-commerce platform Temu through its subsidiary WhaleCo. 

The Commission’s investigation

The Commission preliminarily finds that Temu has infringed its duty to actively cooperate on multiple aspects related to the conduct of the inspection.

In particular, the Commission preliminarily considers that Temu failed to comply with several basic requests made by the Commission in the exercise of its investigative powers under the FSR. Among other things, those requests concerned the provision of information on the organisation and management of Temu’s activities in the EU and the IT tools and systems used by the company for its activities in the EU, as well as to the provision of specific books and records on the company’s activities in the EU. Such requests are customary in a competition investigation and are typically made at the early stages of the inspection. Not providing the information prevented the Commission from reviewing sources of information that could be relevant for its investigation.

If the Commission’s preliminary findings are confirmed, this conduct would amount to an infringement of Temu’s procedural obligations under Article 14 of the FSR

The sending of a Statement of Grounds does not prejudge the outcome of the investigation. Temu now has the possibility to reply to the Commission’s concerns.

Background

Between 2 and 5 December 2025, the Commission carried out an unannounced inspection at the EU premises of PDD and its subsidiary Whaleco in Dublin, Ireland.

The proceedings concern only the behaviour of Temu during the inspection conducted in December 2025. They are without prejudice to the Commission’s main preliminary investigation into whether the company may have been granted foreign subsidies that distort the internal market and which gave rise to the conduct of the inspection, which continues in parallel.

The procedure under the Foreign Subsidies Regulation

The FSR enables the Commission to address distortions caused by foreign subsidies in the internal market and thereby allows it to ensure a level playing field for all companies operating in the internal market while remaining open to trade and investment.

According to Article 9 of the FSR, the Commission has the power to initiate, on its own initiative, investigations into suspected distortive foreign subsidies. In this context, it can, among other things, carry out unannounced inspections, which are a preliminary investigatory step. According to Article 14(3) of the FSR, undertakings or associations of undertakings must submit to inspections ordered by a Commission decision. According to Article 17(1) FSR, where the addressees refuse to submit to inspections, or where they produce the requested books and records related to the business in incomplete form, the Commission may impose fines or periodic penalty payments.

Prior to adopting a decision under Article 17(1) FSR, the Commission sends the company its Statement of Grounds setting out the grounds on which it intends to adopt its decision. The company then has the right to request access to the Commission’s file and to provide its observations. If, after the parties have exercised their rights of defence, the Commission concludes that there is sufficient evidence of an infringement, it can adopt a decision imposing a fine not exceeding 1% of the total turnover in the preceding business year.

For more information

More information will be made available under the case number FS.100186.AP in the public case register on the Commission’s competition website.