Pinduoduo's Temu accuses Shein of antitrust violations in US lawsuit

Asian Tech Press (July 18) -- Temu, a cross-border e-commerce platform owned by Chinese e-commerce giant Pinduoduo, has filed a new lawsuit in the US, alleging that rival Shein violated antitrust laws by using threats and intimidation to prevent clothing manufacturers from working with it.

Temu, which has hired leading U.S. law firm Boies Schiller Flexner LLP to represent it, filed the lawsuit, Case Number: 1:23-cv-11596, in the U.S. District Court for the District of Massachusetts on 14 July.

The lawsuit, handled by U.S. District Judge Denise Casper, seeks treble damages in an unspecified amount.

Temu claims in the complaint that Shein has grabbed more than 75% of the US fast-fashion market since it entered the market in 2017.

After Temu entered the U.S. market in 2022, the lawsuit alleges, Shein abused its market power to force clothing manufacturers into supply arrangements that excluded Temu.

"Shein has engaged in a campaign of threats, intimidation, false assertions of infringement, and attempts to impose baseless punitive fines and has forced exclusive dealing arrangements on clothing manufacturers," Temu said in the complaint.

Temu alleged that Shein employed at least four tactics to stifle competition, including forcing suppliers "to sign loyalty oaths certifying that they will not do business with Temu."

Temu said Shein's business practices have led to higher prices and fewer choices for consumers, as well as hindering "the expansion of the ultrafast fashion market in the United States."

In response, a spokesperson for Shein said Monday, "We believe this lawsuit is without merit and we will vigorously defend ourselves."

Shein and Temu are two of the biggest emerging players in the online retail sector, posing a growing threat to fast-fashion companies such as H&M and Zara.

Founded in China, Shein sells clothing at low prices, including shoes priced at less than $20 and dresses priced at $10. The company produces clothing primarily in China, where Shein is not available to consumers, and sells its products to the US, Europe, and other parts of Asia.

Temu claims to offer lower prices than Shein. Temu's gross merchandise volume (GMV) increased from $3 million in September last year to $192 million in January this year, according to data analytics firm YipitData.

The case is an update on the long-running feud between the two fast-fashion competitors, which have another lawsuit pending between them.

Last December, Shein filed a lawsuit against Temu in the U.S. District Court for the Northern District of Illinois, Case Number: 1:22-cv-07119, just three months after the latter officially launched in North America.

Shein accused Temu of contracting social media influencers to make disparaging remarks about it, and use imposter social media accounts to lure customers into downloading Temu's mobile application.

Temu's motion to dismiss the case is currently pending.

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