The fast-growing Chinese e-commerce platform, Temu, is facing increasing regulatory pressure in Europe. The German Trade Association (HDE) has filed an antitrust complaint with the Federal Cartel Office, accusing Temu of violating pricing freedom regulations.
The complaint alleges that Temu mandates sellers list products at no more than 85% of the price of similar items on competing platforms, while also reserving the right to directly intervene in pricing strategies, ultimately determining the final prices, The Munich Eye reported.
This marks Temu’s first formal antitrust case in the European Union, highlighting the growing scrutiny the platform is facing as it rapidly expands across the continent. Temu, a subsidiary of PDD Holdings, has enjoyed explosive growth in recent years. The company’s revenue surged from $9.1 billion in 2020 to $53.9 billion in 2024, driven by its model of high-volume, low-margin retail. Profitability has also improved, with gross margins ranging between 60% and 75%, and net income margins reaching 24% by 2023.
However, signs of a slowdown have started to emerge. In the fourth quarter of 2024, PDD missed analyst expectations with €14.1 billion in revenue, a 24% year-over-year increase, but below projections. The shortfall was attributed to weakening consumer demand in China, despite heavy discounting and government stimulus efforts. Operating margins also fell, reflecting rising costs associated with logistics and international expansion, particularly through Temu.
The German complaint is not the only regulatory challenge Temu faces in Europe. In addition to the antitrust issue, the European Commission is investigating Temu for potential violations under the Digital Services Act (DSA), focusing on counterfeit goods and misleading design features. Further, Temu could also be on the spotlight for suspected state-backed advantages under the Foreign Subsidies Regulation and facing heightened scrutiny over its customs and VAT compliance.
Temu’s challenges extend beyond Europe. In the United States, the government has imposed tariffs of up to 104% on imports from China, while suspending the de minimis rule, which had allowed duty-free imports on goods valued under $800—an advantage Temu and similar platforms had exploited to offer products at drastically reduced prices.
HDE President Alexander von Preen has emphasized the importance of compliance with local laws and regulations. Amid the growing regulatory landscape, Temu’s ability to navigate these challenges will be critical for its future in key international markets.
For more insights into Temu’s regulatory risks and its potential future in Europe, visit: Antitrust Intelligence – Temu’s Rapid Growth and Mounting Regulatory Risks in 2025.
