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Fast fashion retailer Temu is suing rival Shein over alleged “mafia-style” intimidation tactics to maintain its competitive edge in the market.
According to the lawsuit filed Wednesday in Washington, DC, Temu claims Shein “exploited his dominance in an ultra-quick manner to deny Temu access to suppliers.”
Shein, which reportedly filed for an initial public offering in the U.S. about two weeks ago, does so through “exclusive trading arrangements, mafia-style intimidation of suppliers and anti-competitive minimum price requirements,” the lawsuit continues. Both companies have connections to China.
A spokesperson for Shein told FOX Business the company believes the “lawsuit is without merit” and plans to “vigorously” defend itself against the allegations.
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This photo taken on November 10, 2022 shows the Shein logo on hangers during a media preview of Chinese online fast fashion giant Shein's first permanent showroom in Tokyo. (Richard A. Brooks/AFP via Getty Images / Getty Images)
Temu told FOX Business in a statement: “Your actions were too excessive. We had no choice but to sue them.”
Temu alleged that Shein “uses attack tactics against suppliers who dare to sell to Temu, including false imprisonments and the confiscation of cell phones at meetings that Shein calls under false pretenses.”
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Temu also alleged in the lawsuit that Shein sent DMCA takedown notices to suppliers who list their products on Temu. A DMCA takedown occurs when content is removed from a platform at the request of the content owner.
According to the lawsuit, Temu alleged that Shein resorted to some of these “coercive measures” in the months leading up to his Super Bowl ad campaign in February 2024.
Workers make clothes at a garment factory that supplies Shein, a cross-border fast fashion e-commerce company, in Guangzhou, south China's Guangdong province, July 18, 2022. (Jade Gao/AFP via Getty Images / Getty Images)
Aside from the recent lawsuit, both companies have come under scrutiny from U.S. lawmakers after the Chinese Communist Party's House of Representatives Special Committee released a report suggesting that Chinese e-commerce providers are likely shipping products to the U.S. and thus violated Uyghur forced labor laws.
The report said both companies “rely heavily on the de minimis exemption to ship packages directly to U.S. consumers,” which allows them to face scrutiny for violations of the Uyghur Forced Labor Prevention Act (UFLPA).
The report shocked lawmakers. Rep. Mike Gallagher, R-Wis., told Fox News Digital: “Temu is doing next to nothing to keep its supply chains free of slave labor.”
The committee's investigation is ongoing.
An image of the Shein and Temu logos. (Davide Bonaldo/SOPA Images/LightRocket via Getty Images I Jakub Porzycki/NurPhoto / Fox News)
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The Better Business Bureau has received hundreds of complaints about both companies, many of them related to the quality of the products.
FOX News' Haley Chi-Sing contributed to this report.