Temu Files Lawsuit Against Shein over Antitrust Allegations
Chinese-owned online retailer Temu, has sued rival Shein in the US, alleging it violated antitrust laws by using threats and intimidation to block clothing manufacturers from working with the fast-rising upstart.
Shein and Temu, owned by PDD Holdings Inc., are two of the rising powers in online retail, a growing threat to the likes of H&M and Zara. The lawsuit offers a rare glimpse into the business models of the two secretive companies — and their fierce competitive practices.
According to Temu’s complaint filed with the US District Court for the District of Massachusetts, “Shein knows that manufacturers need Shein’s volume and its access to the U.S. market and it is, therefore, able to coerce manufacturers into arrangements that force manufacturers not to do business with Temu.”
Temu further alleged that 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. The lawsuit claimed that Shein’s business practices have resulted in higher prices and limited choices for consumers while obstructing the growth of the ultrafast fashion market in the United States.
Since 2017 Shein has become a dominant player in the US for ‘ultra-fast-fashion,’ which offers consumers the latest fashion products at low prices. Shein owned more than seventy-five per cent share of the US ultra-fast-fashion market as of 2022, Temu contended.
In response to the lawsuit, Shein dismissed Temu’s claims as meritless and stated that they would vigorously defend themselves.
Chinese company Shein is known for marketing affordable apparel, including shoes priced under US $ 20 and dresses priced at US $ 10.
The company manufactures clothing in China and sells it online in the US, Europe, and Asia.
On the other hand, Temu positions itself as a retailer offering lower prices than Shein.