The FSR in practice: The European Commission suspects Temu of obstructing an investigation
The Commission has presented its concerns to Temu regarding its failure to cooperate in an unannounced inspection of foreign subsidies at the company’s subsidiary in Dublin in December 2025.
We recently wrote about the Nuctech case as an example of the European Commission’s exercise of its authority to initiate ex officio proceedings against undertakings based on the Foreign Subsidies Regulation ((EU) 2022/2560). But the Temu case shows what happens in practice when the Commission has doubts about the undertaking’s cooperation during the investigation.
Unlike the Nuctech case, what is notable in the Temu case is not so much the investigation of potential foreign subsidies as such, as the manner in which the Commission decided to exercise its procedural rights. For the first time, the Commission has issued a “statement of grounds” to an undertaking concerning its possible violation of the duty to cooperate with the investigation.
Inspection is just the start
Temu, a well-known e-commerce platform belonging to the Chinese group PDD Holdings facilitating the sale of goods directly from manufacturers to consumers all over the world, was subjected to an ex officio investigation in December of last year.
The proceeding against Temu was launched with an unannounced inspection at Temu’s Irish subsidiary WhaleCo, through which Temu operates on the European Union market. The Commission’s aim was to gather evidence as part of an investigation into foreign subsidies which potentially could distort the EU’s internal market.
At the end of July 2026 the Commission announced that it had sent a statement of grounds to Temu presenting its preliminary reservations. However, according to the Commission’s press release, the findings do not involve the issue of foreign subsidies as such. Rather, the Commission found that Temu may have infringed the duty to cooperate actively in the inspection. In the Commission’s view, the company failed to turn over some of the information sought, and documents concerning its business in the EU, the undertaking’s organisation, and the IT systems it uses. These became the subject of separate procedural allegations.
It should be stressed that the statement of grounds is a document presenting the Commission’s preliminary findings, and concerns only Temu’s cooperation during the inspection. It does not foretell the result of the investigation into subsidies as such. Temu can also review the case file and raise its own arguments before the Commission takes a final decision.
Why is the case important?
An undertaking’s behaviour during an inspection is relevant. As the Temu case shows, the attitude taken during the inspection can become a separate subject of investigation, apart from the investigation into foreign subsidies as such.
This means that the risk under the FSR is not limited to determining whether the undertaking has received foreign financial support. It is equally important for the organisation to prepare properly for the inspection.
Often the FSR is regarded as relevant primarily in the context of large acquisitions and major public tenders. However, the Nuctech and Temu cases show that the Commission’s practice is quickly evolving. In response, businesses’ preparations with respect to the FSR should not be limited to planning of M&A deals or public procurement, but should become an element of the organisation’s ongoing compliance function.
What does the Commission expect from businesses?
The FSR imposes a duty on undertakings to actively cooperate with the European Commission when conducting its investigations. Among other things, the undertaking must:
- Turn over the information sought on a timely basis
- Provide access to documents and data
- Provide access to the requested systems and media
- Facilitate the proper conduct of inspection activities.
If the Commission finds that the procedural duties under the FSR have been violated during the proceeding, it may impose a fine on the undertaking of up to 1% of its total turnover in the preceding financial year.
What does this mean for businesses?
First and foremost, businesses should not equate FSR compliance solely with notification obligations. It is just as important to prepare the entity as a whole for proceedings conducted by the Commission, on both the organisational and the procedural side.
In particular, it is worth verifying whether the company:
- Can identify and document foreign financial contributions received by the company itself or by group entities
- Has procedures in place for what to do in the event of an inspection by the Commission
- Knows who in the organisation is responsible for contact with the authorities and coordination of actions during an inspection
- Has a functional system in place for storing documents and data, enabling quick access, and
- Has properly trained the staff who may come into contact with the inspectors.
FSR compliance will not eliminate the risk of an inspection. However, it will help the organisation to prepare better for a potential inspection, mitigate the risk of mistakes, and participate in the activities during an inspection with a greater sense of security.
Maria Rudzińska, adwokat, Marta Grodzki, Competition & Consumer Protection practice, State Aid & EU Internal Market Regulation practice, Wardyński & Partners
