Crisis is spreading! Temu faces scrutiny in these two countries

Earlier this year, a report released by data analysis platform ecommerceDB showed that the European e-commerce market will reach more than 800 billion US dollars in 2023. As a large cross-border e-commerce platform, Temu's development in the European market has attracted attention.

Last April, Temu launched six European sites in the UK, Germany, France, etc. These sites continued Temu's consistent low-price strategy. Although the web pages were mainly in English, the settlement currency was changed to Euro. At the beginning of the launch, they provided free shipping and 90% discount.

Almost a year after entering the European market, Temu has faced scrutiny in Ireland and Hungary.

Ireland is the headquarters of Temu in Europe. Recently, a spokesperson for the relevant agency in Ireland said that as part of the Digital Services Act (DSA), the agency will initiate a VLOP-related review of Temu. According to the requirements of the DSA, companies with more than 45 million users will be identified as very large online platforms (VLOP).

Data shows that Temu’s user base had not yet reached the DSA threshold in September last year. However, as Temu’s popularity and user base soared, Temu’s monthly active users in Europe surpassed that of eBay, a long-established U.S. e-commerce platform, in October last year, reaching 51 million (data source: data.ai).

The Hungarian Competition Authority ( GVH) recently revealed that the GVH will investigate Temu’s unfair trading practices and consumer deception.

GVH said that based on their investigation of several complaints, they believed that Temu may have engaged in business practices such as "exploiting false discounts, psychological pressure and misleading green information".

During the investigation, GVH found that Whaleco Technology Limited, Temu's operating company in Europe, had price disclaimers and promotions on its website and app, and marked some products with discounts of "up to 95%" or even higher to attract users, but when clicking on the products, these discounts could not be found. GVH believes that this behavior may mislead consumers.

The investigation also found that Temu also posted urgent information about the availability of goods throughout the purchase process in promotional offers, such as "Only X left", "Almost sold out", "Hurry up! More than X people have added this item to their shopping carts", etc., which created a sense of tension among customers about the limited quantity of goods.

In addition to some other actions, GVH immediately announced to the outside world through the media that it would launch an antitrust investigation into Temu's operators. However, the initiation of an antitrust investigation procedure does not mean that Temu has indeed committed this infringement. More specific information will have to wait for the final investigation results. It should be mentioned here that the launch time of Temu's Hungarian site is August 2023, which means that Temu has been online here for only more than half a year.

It is reported that according to local laws, the investigation period for such allegations is 3 months, but the agency has the right to extend it twice based on the investigation situation, each time for a maximum of two months; if it is determined that competitive behavior exists, the maximum fine faced by the relevant company is 13% of its international business's annual turnover.

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