The FSR investigation
Acting ex officio (on its own initiative) under Article 9 FSR, the Commission initiated an investigation into indications that Temu may have received foreign subsidies that distort the internal market. In that context, the Commission carried out an unannounced inspection at WhaleCo’s Dublin premises between 2 and 5 December 2025. This was the second ever dawn raid carried out under the FSR, following inspections at Nuctech in 2024.
Temu is part of the Chinese group PDD Holdings and operates in the EU through the Irish-based WhaleCo Technology Limited. The platform had already come under Commission scrutiny: in May 2026, it was fined EUR 200 million under the Digital Services Act (DSA), and a second DSA investigation is still ongoing.
The obstruction proceedings: what is Temu accused of?
On 31 July 2026 the Commission has issued a Statement of Grounds to PDD Holdings Inc. and its Irish subsidiary WhaleCo Technology Limited, the companies behind the e-commerce platform Temu. The Statement of Grounds focuses on Temu’s conduct during the December 2025 inspection. Under the FSR, undertakings are under a duty to cooperate fully with inspections carried out by the Commission. Inspectors may enter all business premises, examine physical and digital business records and ask members of staff for explanations.
The Commission has provisionally concluded that Temu breached this duty to cooperate on multiple aspects in December. Specifically, Temu is alleged to have failed to comply with requests on matters including the provision of information on the organisation and management of its activities in the EU, the IT tools and systems used by the company, and the provision of specific books and records concerning its EU operations.
Where an undertaking fails to cooperate satisfactorily, the Commission has two principal instruments at its disposal. First, under Article 17 FSR, it may impose a periodic penalty payment of 5% of the average daily turnover or a fine not exceeding 1% of the aggregate annual turnover. These sanctions may also be imposed on undertakings which are not themselves the subject of the investigation but which, for example, fail to cooperate with requests for information. While the Commission has similar powers under ordinary principles of competition law and State aid law, it rarely exercises these in practice.
Second, the Commission may take a “decision on the basis of the facts available” under Article 16 FSR. If an undertaking fails to provide the information necessary for a full analysis of a financial contribution, the Commission may assess whether a benefit has been conferred on the basis of the information available. Consequently, the outcome of the investigation may be less favourable to the company concerned than if it had cooperated fully. Under Article 42 FSR, Temu now has the right of access to the file and rights of defence. A final decision imposing a fine can only be adopted once Temu has submitted its observations and the Commission has concluded that there is sufficient evidence of an infringement. This decision may then be brought before the Court of Justice of the European Union.
Key takeaways
- Dawn raid protocols are also relevant in the context of the FSR.
- Obstruction proceedings run in parallel with the main investigation and may weaken a company’s position in that investigation through the mechanism set out in Article 16 FSR.
- The Commission takes procedural cooperation under the FSR at least as seriously as it does under traditional competition law and applies the rules with equal rigour.