EU probes Temu over illegal products

The European Union has launched a formal investigation into Chinese-founded e-commerce platform Temu on suspicion the site is not doing enough to stop the sale of illegal products, in a probe that could lead to large fines.

The probe will also look at dangers from the platform's "potentially addictive design", the European Commission said.

Brussels wants Temu to ensure "products sold on their platform meet EU standards and do not harm consumers", EU tech chief Margrethe Vestager said in a statement.

As pressure builds from EU authorities the online retailer has started to engage with an anti-counterfeiting network.

Temu is considering joining a group of e-commerce platforms and brands that collaborate to prevent the sale of fake products online in Europe, according to a meeting agenda seen by Reuters.

The "Memorandum of Understanding (MoU) on the sale of counterfeit goods on the internet" is a voluntary agreement facilitated by the European Commission, and signatories include online retailers Amazon, Alibaba, and eBay, and brands like Adidas, Nike, Hermes and Moncler.

Temu is set to make a presentation at an 11 November meeting of the MoU members as a "potential new signatory", the agenda note showed.

Temu is in discussions to join the initiative, a spokesperson said in a statement to Reuters, adding that "collaborative efforts are essential" to address counterfeiting.

The European Commission's investigation into Temu will look at potential breaches of EU rules against the sale of illegal products, having earlier this month requested information from Temu under the Digital Services Act(DSA), an EU law.

Temu, a subsidiary of Chinese e-commerce giant PDD Holdings, has grown rapidly in Europe and the United States through aggressive marketing, drawing millions of users to its website and app with the slogan "shop like a billionaire", offering rock-bottom prices on everything from kitchen appliances and electronics to clothing and accessories.

Many of the clothes, shoes, and handbags sold on the site are designed to look similar to popular branded products, at a fraction of the price.

An industry source, who asked not to be named, said they were concerned that accepting Temu's signature to the anti-counterfeits MoU would affect the credibility of the network.

The European Commission designated Temu a "very large online platform" in May meaning it must do more to fight illegal and harmful content as well as counterfeit products on its platform under the DSA.

Temu had 92 million monthly active users in the EU in September, the Commission said.