The European Commission has escalated its regulatory scrutiny of the popular e-commerce platform Temu by issuing a formal Statement of Grounds to its parent company, PDD Holdings Inc., and its Irish subsidiary, WhaleCo Technology Limited. The move targets suspected obstruction during an unannounced inspection conducted late last year, marking a significant step in the European Union’s enforcement of its trade and competition rules.
The administrative proceedings stem from an unannounced inspection carried out between December 2 and December 5, 2025, at WhaleCo’s premises in Dublin, Ireland. European regulators originally launched the inspection to gather evidence supporting an investigation into whether Temu had received foreign subsidies that could distort the internal market and undermine fair competition for European businesses. However, the latest action does not focus on the subsidies themselves, but rather on how the company behaved while officials were on-site.
According to the Commission’s preliminary findings, Temu failed to comply with its legal obligation to actively cooperate during the inspection process. Investigators noted that the company did not fulfill several basic requests that are customary in early-stage competition inquiries. These requests included providing essential information regarding the organizational structure and management of Temu’s European operations, detailing the IT tools and systems utilized for business activities within the EU, and handing over specific books and records. By failing to supply this documentation, the company allegedly prevented regulators from accessing sources of information vital to their ongoing market distortion probe.
This conduct constitutes a preliminary infringement of Temu’s procedural obligations under Article 14 of the Foreign Subsidies Regulation, a legislative framework designed to address market distortions caused by foreign state backing while keeping European markets open to fair trade and investment. Under the regulation, companies operating in the EU must fully submit to inspections ordered by Commission decisions, and failing to do so or producing incomplete records can trigger severe penalties.
The issuance of the Statement of Grounds is a procedural milestone rather than a final judgment. It grants Temu the formal right to inspect the Commission’s case file and submit its observations and defense. Should the preliminary findings be confirmed after the company exercises its right of defense, the Commission holds the authority under Article 17 of the regulation to adopt a decision imposing fines of up to one percent of the total turnover achieved by the company in the preceding business year.
Meanwhile, the main investigation into whether Temu benefited from distortive foreign subsidies continues in parallel, remaining entirely separate from these newly initiated proceedings regarding inspection obstruction. Further developments and public records concerning the case will be made available under case number FS.100186.AP through the European Commission’s competition website.