Chinese online marketplace Temu under scrutiny by Hungary’s competition watchdog

Chinese online marketplace Temu under scrutiny by Hungary’s competition watchdog
Chinese online marketplace Temu has carved out a significant market share in Hungary in less than six months. / bne IntelliNews
By bne IntelliNews March 14, 2024

Hungary's Competition Office (GVH) announced the launch of a procedure against Whaleco Technology, the European operator of Chinese-owned online marketplace Temu on March 13, two weeks after launching a probe.

Ecommerce Hungary (ECH), an association of Hungarian e-retailers, filed a complaint against the company after it cut off a huge market share with its aggressive pricing strategies and potential below-cost selling practices. ECH said the company’s business practices distort the market and harm European and Hungarian online businesses.

GVH experts assessed reports and collected information, and the oversight procedure was launched on that basis. Messages on the Temu platform urging consumers to "hurry up" with their purchases because a limited number of the products are left, or touting products rated "five stars" by earlier buyers is likely a form of "psychological pressure", while promises of discounts of "as much as 95%" could be misleading, GVH said.

With the launch of the procedure, GVH aims to clarify the facts and determine whether violations indeed took place.

The initial timeframe for the procedure is three months. GVH noted that fines levied in oversight procedures are capped at 13% of global, consolidated revenue.

Head of ECH, Istvan Zabari told Forbes. that they do not want to stifle competition, just a level playing field, as local businesses have to adhere to many regulations currently disregarded by Temu. Companies like, the Hungarian unit of Czech online retailer has brought in the best of innovation to the market.

Temu’s predatory pricing has raised alarm bells among local online marketplace operators. Since its launch six months ago, the company carved out a 25-29% market share within foreign e-commerce sites from just 0.5% in September, which made it the second-largest online marketplace in the entire market. It also boasted an HUF18,000 (€45) average basket value in January, which is considered sizeable, according to figures by online market researcher GKID.

GVH pays close attention to the practices of tech companies and online market platforms that affect the interests of large numbers of consumers and businesses, and has required Google and PayPal to take remedial measures and sanctioned Apple and in recent years.

A year ago, e-commerce platform Wish agreed to modify its business practices to avoid a fine after a GVH probe, and GVH closed a probe of TikTok in November that achieved a global impact.

Temu also released a statement saying the company is  "fully" cooperating with the inquiry and is ready to take "all necessary steps" to "ensure that operations meet the highest standards of compliance".