Chinese e-retailer Temu files lawsuit in US against rival Shein

Chinese e-commerce retailer Temu has filed a lawsuit in Massachusetts accusing its rival Shein of violating US antitrust law by preventing garment makers from working with it.

Temu, which is owned by popular Chinese e-commerce site Pinduoduo, is alleging that Shein has compelled clothing manufacturers to submit to unfair supply chain arrangements preventing them from working with Temu after it entered the US market in 2022.

Shein and Temu are fast-growing online shopping platforms.

Shein has grabbed the largest share of the fast fashion market in the US, at over 50%, according to Temu’s complaint.

Temu is the most downloaded app in the US, according to the website data.ai, formerly App Annie, which tracks app rankings. It offers everything from apparel to household goods at similarly competitive prices.

“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,” according to the complaint Temu filed on July 14 with the US district court for the district of Massachusetts.

In an emailed statement, Temu said that Shein also punished merchants who worked with Temu by imposing “extrajudicial fines” and forced retailers to assign their intellectual property rights to Shein, which could then seek to enforce these rights against those who also operated on Temu.

“For a long time, we have exercised significant restraint and refrained from pursuing legal actions. However, Shein’s escalating attacks leave us no choice but to take legal measures to defend our rights and the rights of those merchants doing business on Temu, as well as the consumers’ rights to a wide variety of affordable products,” the retailer said in the statement.

Shein did not immediately respond with a comment, although it previously said the case was “without merit” and that the firm would defend itself against the allegations.

Earlier, Shein sued Temu in Illinois, asserting that it had engaged in deceptive business practices and created impostor pages that violated copyrights and trademarks.

China’s regulators have cracked down on the widespread practice by internet firms in the country of forcing retailers, brands and suppliers to work exclusively with them.

Both Shein and Temu have gained attention as imports to the US via their platforms have surged.

Just days ago, a filing in California by three US fashion designers accused Shein of copyright infringement so aggressive that it amounted to racketeering.

The filing alleges the company has violated the Racketeer Influenced and Corrupt Organisations Act, better known as RICO, a law originally crafted to prosecute organised crime.

A Congressional report published last month questioned both companies’ compliance with efforts to prevent goods made by forced labour from being sold on their platforms.

An anonymous coalition of brands and human rights advocates called Shut Down Shein has been lobbying lawmakers seeking to increase scrutiny on the fast fashion site.