Chinese e-commerce platform Temu has taken legal action against its rival Shein in the Boston Federal Court, accusing the company of violating US antitrust laws in its business deals with clothing manufacturers. The lawsuit alleges that Shein abuses its dominant market position to pressure manufacturers into refraining from collaborating with Temu.
According to the lawsuit filed by Temu, Shein compels manufacturers to sign loyalty agreements that prohibit them from conducting business with Temu. This coercive behaviour limits consumer choices and leads to higher prices, claims Temu.
Additionally, Temu argues that Shein’s practices have hindered the growth of the fast fashion market in the United States. The company asserts that Shein’s actions have created an environment where consumers face limited options and inflated prices.
The lawsuit represents an escalation of the ongoing legal battle between the two companies. At present, the two e-commerce giants are already locked in a legal dispute in Chicago, where Shein has accused Temu of working with influencers to tarnish its reputation on social media platforms.
Meanwhile, Shein faces additional legal challenges in the United States, where rumours are currently circulating regarding the company’s plans to go public. Shein’s IPO aspirations face opposition from 24 US representatives who have urged the Securities and Exchange Commission (SEC) to verify that Shein’s business operations are free from forced labour before approving its listing on the New York stock exchange. In another legal setback, Shein was recently hit with a lawsuit by a group of designers who accused the company of engaging in “systemic and repeated” copyright infringement.
All things considered, the outcome of these legal battles will undoubtedly shape the future trajectory of each company and may have broader implications for the fast fashion industry.
