The Commission has fired its clearest warning yet at Temu, telling the fast-growing marketplace it may have obstructed an inspection tied to Europe’s foreign subsidies rules. The move puts the platform at the centre of a procedural fight that could end in a heavy fine.

On 31 July the Commission sent a statement of grounds to PDD Holdings and its subsidiary WhaleCo Technology, the entities behind Temu in the EU. Investigators say the company failed to meet several basic requests during an unannounced visit, and the case now hinges on whether those refusals broke the law on foreign subsidies.

Officials carried out the inspection from 2 to 5 December 2025 without prior notice. They wanted to understand how Temu organises and manages its European activities, which IT tools it runs inside the EU, and how it keeps the books and records tied to that business.

According to the Commission, the marketplace did not hand over much of that material. Article 14 of the Foreign Subsidies Regulation obliges companies to cooperate with such checks, and the regulator argues that Temu fell short of those duties.

The stakes are real. When a firm obstructs an inspection under this regime, the Commission can impose fines of up to one percent of annual turnover, plus daily penalties until the company complies. For a group of Temu’s scale, that arithmetic quickly runs into serious money.

Temu rejects the account. The company says it cooperated fully and met every request during the visit, and it categorically denies receiving any subsidy that distorts the single market. It now has the right to reply in writing and to ask for a hearing before the Commission decides anything.

The underlying probe remains open. Regulators launched it on suspicion that Chinese state support may have helped Temu undercut rivals and flood the bloc with cheap parcels. The obstruction case sits alongside that investigation rather than replacing it.

The dispute also tests a young enforcement tool. Brussels created the foreign subsidies rulebook to police money flowing from outside the bloc, and each early case shows regulators how far their powers stretch when a target pushes back.

For European retailers who have long complained about a tilted playing field, the signal matters. A firm win would tell every non-EU platform that stonewalling inspectors carries a price, while a stumble would embolden others to resist.

Consumer groups will watch closely too. Millions of shoppers rely on Temu for low prices, and any penalty or forced restructuring could ripple through how the platform prices and ships across the continent.

The Commission has set no deadline for a final ruling. Once Temu files its defence, investigators will weigh the arguments and decide whether to confirm the charge, drop it, or press ahead with fines that would sharpen the whole regime.