German Competition Authority Investigates Temu Over Pricing Practices

The German Federal Cartel Office has initiated a formal investigation into the business practices of Whaleco Technology Limited, the company operating the popular online marketplace Temu. The authority aims to scrutinize the terms imposed on retailers and the platform's approach to pricing, with a particular focus on whether Temu restricts merchants' ability to independently set product prices on the German market.

Temu, which is managed from Dublin, Ireland, has rapidly grown in popularity among consumers across Europe and especially in Germany since its launch in 2023. The platform became accessible to German-based sellers in 2024, contributing to a surge in market activity and positioning Temu among the top online marketplaces by transaction volume in the country.

The investigation was prompted by claims that Temu may be enforcing price restrictions on merchants, compelling them to offer prices no higher than 85 percent of those listed on competing platforms for similar products. Such measures, if proven, could represent a significant limitation to competitive pricing and potentially result in higher prices for consumers on other retail channels.

The Federal Cartel Office is also examining whether Temu sets end-user prices for products without allowing sellers the flexibility to determine their own pricing strategies. If these suspicions are confirmed, the company could be in violation of German and European competition laws designed to ensure fair market conditions and consumer choice.

In response to the inquiry, Temu has stated that it operates in compliance with all relevant laws and regulations in the countries where it is active. The company expressed confidence in its ability to address any concerns raised by regulatory authorities but has not provided detailed public comments regarding the specific issues under review.

The case initially gained momentum following a complaint filed by the German Retail Federation (HDE), which alleged that Temu's pricing policies undermine merchants' autonomy and fair competition. According to the complaint, the platform's strict pricing requirements could disadvantage retailers and distort market dynamics, impacting both sellers and consumers.

Temu's rapid rise has not been without controversy. Despite its strong growth and widespread adoption, the platform has faced criticism from industry groups, policymakers, and consumer advocacy organizations. Concerns have been raised regarding product quality, lack of oversight, and the overall fairness of the competitive environment. Calls for stricter regulation and enhanced scrutiny of online marketplaces have intensified in light of these challenges.

Separately, Temu is already subject to an ongoing investigation by the European Commission, which is assessing the risk of non-compliant and potentially unsafe products being sold through the platform. Authorities have highlighted the potential for consumers to encounter items, such as children's toys and electronic devices, that may not meet European Union safety standards. Should these concerns be validated, Temu could face significant regulatory penalties within the EU.

The outcome of the German Federal Cartel Office's investigation will likely have broader implications for the operation of online marketplaces in Germany and across Europe. It may influence future regulatory approaches to digital platforms that connect international sellers with local consumers, particularly regarding pricing, product safety, and market competition.