Hungarian Competition Authority launches antitrust probe against Temu
On 27 February 2024, the Economic Competition Authority announced that several notifications are pending regarding the commercial practices of the Chinese online marketplace Temu.
On the basis of the information and data available, Whaleco Technology Limited, a company incorporated in Ireland, is likely to engage in price disclaimers and promotions through its website and Temu mobile app that may be likely to mislead consumers. The company communicates discounts of "up to 95%" (or higher) on certain product categories for the products it sells, but no such discount is found in the results when clicking on the category. The GVH also observed that the company, in the context of its promotional offers for products available on its website and mobile app, publishes urging messages throughout the purchase process regarding the availability of products, such as "only 4 left", "almost sold out", "bought 1 minute ago", "Hurry up! More than x people have added this product to their cart", "Wanted! x sold in the last 24 hours", "x people have recently rated this product with 5 stars". These messages, through their content and visual presentation, are likely to have the overall effect of urging and psychologically pressurising consumers to decide to buy the product.
The GVH also found that the website, by including the statement "Socially Responsible - Doing Good for the World" among the values published and professed on the link to "About Temu", was likely to engage in deceptive trade practices with regard to the essential characteristics of the products, in particular with regard to their environmental impact. Furthermore, the GVH also considers that the company is likely to give the false impression that the products it promotes and markets are lawfully saleable despite the fact that they do not bear the 'CE' conformity marking.
Based on the above, the GVH is opening a competition investigation against Whaleco Technology Limited, the operator of the Temu online marketplace, for an alleged infringement of the prohibition of unfair commercial practices against consumers.
The opening of competition proceedings does not mean that the company has committed the infringement. The procedure is aimed at clarifying the facts and thereby proving the alleged infringement. The time allowed for the investigation is three months, which may be extended twice, each time for a maximum of two months, if justified. The maximum fine that can be imposed in a competition procedure is 13% of the annual turnover of the international group of companies concerned.
The GVH also noticed that Temu also promotes its products through Hungarian influencers with large followings on various social media. In this context, the national competition authority - in line with its guidelines for influencers published in November 2022 - is increasingly drawing the attention of the opinion leaders concerned to the need to comply with the rules on advertising and the possible legal consequences in case of failure to do so. The President of the GVH has sent a letter of formal notice to a national influencer promoting Temu's products to bring its advertising activities into line with the law prohibiting unfair commercial practices against consumers.
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