Shein May Face EU Investigation Over Sale of Illegal Products

EU Investigation into Shein's Practices

By Foo Yun Chee

Background on Shein's Legal Challenges

BRUSSELS, Jan 27 (Reuters) - Chinese fast-fashion online retailer Shein could face an EU investigation on the sale of illegal products on its platform, but is unlikely to be hit with an order to suspend its website, a senior European Commission official said on Tuesday.

Regulatory Actions and Responses

Shein found itself in the Commission's crosshairs in November last year after the sale of childlike sex dolls and other illegal products in France which the EU regulator said underscores the systemic risk the company may pose to consumers in the 27-country European Union.

Potential Consequences for Shein

Using its power under the Digital Services Act which requires large online platforms to do more to tackle illegal and harmful content, the Commission has asked Shein to provide details and documents on measures taken to counter the problems.

"We have been urged by Mrs Virkkunen to act very swiftly," Rita Wezenbeek, the Commission official charged with enforcing the DSA, told a European Parliament hearing on Shein, referring to EU tech chief Henna Virkkunen.

She pointed to the one-year investigation into Alibaba's AliExpress which ended with the company pledging more transparency on its advertising and recommender systems last year, and the levying of charges against Chinese rival Temu in July last year.

"We want to apply the same speed with respect to Shein. So this may mean that we have to open an investigation. We have loudly received the call today to do that, but it will in the end be a decision by Mrs Virkkunen whether we do so," Wezenbeek said.

Shein's general counsel for Europe, Middle East and Africa, Yinan Zhu, told EU lawmakers on Tuesday that the company has taken measures to take down illegal products, but that such issues happened to multiple marketplaces, with bad actors always trying to find ways to circumvent controls.

EU regulators are unlikely to issue an interim measure or ban against Shein despite EU lawmakers' calls, Wezenbeek said, referring to a Paris court ruling last month rejecting the French government's request to suspend Shein over its sex doll sales.

The Paris court had said a ban would be "even manifestly disproportional because of the measures Shein took, because of the fact that there were only certain products found... and also that the French state provided no evidence of systemic non-compliance", Wezenbeek said.

Companies risk fines up to 6% of their total global revenues for DSA breaches.

(Reporting by Foo Yun Chee; Editing by Jan Harvey)