Description
On 28 July, the Commission made a preliminary finding that Temu had breached its obligation under the Digital Services Act to adequately assess the risk of illegal products being disseminated on its market.
The data showed that there is a high risk for EU consumers to come across illegal products on the platform. Specifically, the analysis of a mystery shopping exercise conducted by the Commission found that consumers buying on Temu are very likely to find non-compliant products on offer, such as children's toys and small electronics.
According to the Commission's analysis, Temu's October 2024 risk assessment was inaccurate and based on general industry information rather than specific details about its market. This may have led to inadequate mitigation measures against the spread of illegal products.
The Commission will continue to investigate other alleged violations initiated in October 2024, including the effectiveness of its mitigation measures, the use of addictive design features, the transparency of its recommendation systems, and its access to data for researchers.
The Commission's preliminary findings do not prejudge the final outcome of the investigation, as Temu now has the opportunity to exercise its rights of defence by reviewing the Commission's investigation file and responding in writing to the Commission's preliminary findings. In parallel, the European Digital Services Committee will be consulted.
Should the Commission's preliminary findings be definitively confirmed, the Commission would adopt a non-compliance decision finding that Temu is in breach of Article 34 of the Digital Services Act. Such a decision could result in fines of up to 6 per cent of the provider's total annual worldwide turnover and order it to take measures to remedy the violation. A non-compliance decision may also trigger an enhanced supervisory period to ensure compliance with the measures the provider intends to take to remedy the breach.
On 31 October 2024, the Commission opened proceedings against Temu. The Commission's investigation is being conducted in cooperation with national digital service coordinators, customs authorities, market surveillance authorities and other relevant third parties, in line with the principles outlined in the E-Commerce Communication, and is proceeding in parallel with a separate investigation by the Consumer Protection Cooperation (CPC) network and the first ever product safety sweep, ensuring a comprehensive and coordinated approach to addressing concerns about Temu's practices.
The steady increase in the volume of products sold online in the EU is accompanied by an increase in unsafe, counterfeit or non-compliant products, which could be detrimental to consumer health and safety, the environment and fair competition in the digital single market.
In order to counter these risks, the Digital Services Act includes an obligation to tackle illegal content online and requires platforms to put in place user-friendly mechanisms that allow users to report illegal content and have recourse to the content moderation decision. The Digital Services Act also provides for specific rules tailored to online marketplaces, such as operator tracking, to ensure that all online marketplaces collect information on operators selling their products or services. Finally, the Digital Services Act prohibits dark patterns and specifies rules on advertising and detailed transparency obligations, including how products are recommended to consumers.
Source: European Commission
Image owner: Temu