EU alleges Temu obstructed foreign subsidies inspection | Digital Watch Observatory

3 Aug 2026 EU alleges Temu obstructed foreign subsidies inspection Temu faces procedural scrutiny after the EU alleges obstruction during a Foreign Subsidies Regulation inspection. The European Commission has preliminarily found that Temu may have obstructed an inspection into possible foreign subsidies that could distort competition in the EU. The Commission sent a formal Statement of Grounds to Temu owner PDD Holdings and its subsidiary, WhaleCo Technology Limited, outlining conduct that it believes may have breached the Foreign Subsidies Regulation. Investigators carried out an unannounced inspection at the companies’ premises in Dublin between 2 and 5 December 2025. The inspection formed part of a separate investigation into whether Temu had received foreign subsidies capable of distorting the EU internal market. According to the Commission , Temu failed to provide information concerning the organisation and management of its the EU operations, the IT systems supporting its activities and specific business records. Regulators said the missing information prevented them from examining potentially relevant evidence. The Statement of Grounds is a preliminary procedural step and does not determine the outcome of the case. PDD Holdings and WhaleCo can access the Commission’s file and respond to the allegations before a final decision is made. If the Commission confirms that the companies breached their obligation to cooperate, it may impose a fine of up to 1% of their total turnover in the preceding business year. Why does it matter? The case shows that companies investigated under the Foreign Subsidies Regulation can face penalties for procedural conduct even before regulators decide whether foreign financial support distorted competition. For major digital platforms, responding properly to inspections and maintaining accessible corporate and technical records are therefore becoming significant regulatory obligations. Would you like to learn more about AI, tech and digital diplomacy ? If so, ask our Diplo chatbot ! Related topics Competition Digital business models E-commerce and digital trade Economic Jurisdiction Legal and regulatory Related news Türkiye’s intelligence academy calls for national AI doctrine China forms quantum information standards committee DeepSeek upgrades V4-Flash for coding and multi-step tasks EU seeks up to seven AI Gigafactories in €30 billion plan UK’s CMA examines Microsoft 365 subscription practices Intel advances chiplet packaging for AI processors