Brussels has fired its loudest warning shot yet at the ultra-low-cost online marketplaces reshaping European retail, slapping Chinese-owned Temu with a €200 million penalty for failing to keep illegal and hazardous goods off its platform.
The fine, the largest yet issued under the European Union’s Digital Services Act (DSA), follows a near two-year investigation into whether the largest online platforms are policing the sale of illegal and harmful products to consumers across the bloc. It is also the most significant enforcement action taken against a Chinese-owned platform since the regime came into force.
In a decision published this week, the European Commission concluded that Temu had “failed to diligently identify, analyse and assess the systemic risks of illegal products being offered on its platform and the resulting harm to consumers in the European Union”. Further penalties could follow, the commission warned, with Temu given until the end of August to submit a remedial action plan or face periodic penalty payments.
Mystery shoppers, dodgy chargers and dangerous toys
At the heart of the case sits a mystery-shopping exercise in which investigators bought products directly from Temu and sent them for laboratory testing. The results made for uncomfortable reading.
A high proportion of phone chargers failed basic electrical safety tests. Baby toys were judged to present medium to high safety risks, including chemicals such as phthalates above EU legal limits, alongside small detachable parts that posed a potential suffocation hazard for infants and toddlers.
Henna Virkkunen, the commission’s executive vice-president for tech sovereignty, security and democracy, was unsparing in her assessment. “Risk assessments are not box-ticking exercises, they are the backbone of the DSA,” she said.
“Temu’s risk assessment underestimates concrete risks, lacks specificity, is not grounded in solid evidence and is not comprehensive. It leaves regulators, users and the public in the dark about the true scale of potential harm posed by illegal products sold on Temu.”
Breakneck growth on a collision course with Brussels
Temu was founded in 2022 by the Chinese e-commerce group PDD Holdings and has expanded with extraordinary speed by offering ultra low-priced goods shipped directly from manufacturers, frequently via heavily subsidised logistics. Its push into the United Kingdom and continental Europe has been powered by aggressive digital advertising and deep discounting.
That model has placed it in direct competition with Shein, which pioneered the low-cost, app-driven approach and has already redrawn the contours of the fast-fashion supply chain. For independent British retailers and SMEs, the rise of both has stoked a long-running row over a tilted playing field, with industry groups calling for a crackdown on Chinese fast-fashion imports amid fears that domestic retail is being undercut.
The commission’s intervention will be watched closely on this side of the Channel. While the UK is no longer bound by the DSA, Brussels has been steadily tightening customs checks on online retailers in a wider crackdown on unsafe goods, and pressure is mounting on Westminster to follow suit. The Online Safety Act and the forthcoming Product Regulation and Metrology Bill are widely expected to give UK regulators sharper teeth on marketplace listings, with Reuters reporting that the Brussels ruling is already being used as a reference point by national consumer authorities.
Temu pushes back
Temu, for its part, was quick to reject the commission’s assessment. A spokeswoman said the company “respects the objectives of the Digital Services Act and the need for clear, consistent rules across the digital economy”, but added that it considered the fine “disproportionate”.
The decision, she stressed, related to Temu’s first DSA assessment back in 2024 and “does not reflect the current state of our systems”. The business had since strengthened its risk controls and governance, she said.
“We will continue to engage with regulators in good faith and work toward a marketplace that serves consumers, businesses, and communities responsibly. We are reviewing the decision carefully and considering all available options.”
What it means for SMEs
For Britain’s small and mid-sized retailers, the case lands at a delicate moment. Many have long argued that hyper-scale platforms enjoy a structural advantage on cost and compliance — and that consumers are bearing the risk in their parcels. With Temu now actively recruiting UK sellers as it builds out a domestic warehouse footprint, the commission’s ruling sharpens a familiar question: how far should responsibility for product safety travel up the chain, from the third-party seller to the platform that hosts them?
For now, Brussels has provided its answer. Whether London responds in kind may shape the next chapter of UK e-commerce.
Read more:
Temu hit with record €200m EU fine over unsafe baby toys and dodgy chargers