HONG KONG (AP) — Chinese e-commerce retailer Temu has filed a lawsuit in Massachusetts accusing rival Shein of violating U.S. antitrust law by blocking clothing makers from doing business with it.
Temu, which is owned by popular Chinese e-commerce site Pinduoduo Inc., alleges Shein coerced garment makers into unfair supply chain agreements preventing them from working with Temu after it entered the US market in 2022.
Shein (SHE-in) and Temu (TEE-mu) are growing online shopping platforms. Shein has captured the largest share of the fast fashion market in the United States, at more than 50%, according to Temu’s complaint. Temu is the most downloaded app in the United States, according to the data.ai website, formerly App Annie, which tracks app rankings. It offers everything from clothing to household items at equally competitive prices.
“Shein engaged in a campaign of threats, intimidation, false claims of infringement and attempted to levy baseless punitive fines and enforce exclusivity agreements on apparel manufacturers,” according to the lawsuit Temu filed July 14 in U.S. District Court for the District of Massachusetts.
In an emailed statement, Temu said Shein also punishes merchants who work with Temu with “extrajudicial fines” and forces retailers to assign their intellectual property rights to Shein, who could then seek to enforce those rights against those who also operate on Temu.
“For a long time, we have exercised great restraint and refrained from taking legal action. However, the escalation of Shein’s attacks leaves us with no choice but to take legal action to defend our rights and the rights of merchants doing business on Temu, as well as the rights of consumers to a wide variety of affordable products,” the retailer said in the statement.
Shein did not immediately respond to AP with a comment, although he previously said the matter was “without merit” and that the company would defend itself against the allegations.
Previously, Shein sued Temu in Illinois, claiming he engaged in deceptive marketing practices and created impersonator pages that violated copyrights and trademarks.
Chinese regulators have cracked down on the widespread practice of internet companies forcing retailers, brands and suppliers to work exclusively with them.
Shein and Temu have both caught the eye as imports to the United States through their platforms have increased.
Just days ago, a California case filed by three American fashion designers accused Shein of copyright infringement so aggressive it amounts to racketeering. The filing alleges the company violated the Racketeer Influenced and Corrupt Organizations Act, better known as RICO, a law originally designed to prosecute organized crime.
A congressional report released last month called into question the two companies’ compliance with efforts to prevent the sale of goods made by forced labor on their platforms.
An anonymous coalition of brands and human rights advocates called “Shut Down Shein” has lobbied lawmakers seeking increased oversight of the fast fashion site.