Temu files lawsuit accusing Shein of using size to bully manufacturers into exclusivity

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Temu lawsuit overview: 

• Who: Whaleco Inc., the company name of Temu, filed a lawsuit against Shein U.S. Services LLC, Shein Distribution Corporation and Roadget Business Partnership Ltd. 
• Why: Temu claims that Shein tried to take Temu out of the marketplace through a campaign of threats, intimidation and false assertions of infringement, which violates the Sherman Antitrust Act.
• Where: The Temu lawsuit was filed in federal court in Massachusetts.
• What are my options: Try Charlotte Russe as an alternative to Shein.

Whaleco Inc., the company name for the fast-fashion brand Temu, filed a lawsuit against Shein U.S. Services and two other Shein companies claiming that the companies have used unfair business practices in an attempt to block Temu from the fast-fashion marketplace.

Shein entered the U.S. marketplace in 2017 while Temu followed in September 2022, in many cases offering similar or the same product for 10% to 40% less than Shein, according to the Shein lawsuit.

Rather than competing with Temu’s prices, Shein chose to “campaign of threats, intimidation, false assertions of infringement, and attempts to impose baseless punitive fines and has forced exclusive dealing arrangements on clothing manufacturers,” according to the Temu lawsuit.

Shein has enforced exclusivity contracts with manufacturers, who Shein knows need the volume of the Shein marketplace, in order to prevent those businesses from doing business with Temu. That conduct has allowed Shein to maintain higher prices and less selection rather than fairly competing with Temu, the Shein lawsuit claims.

Shein’s actions are a violation of the Sherman Antitrust Act, Temu lawsuit claims

Shein’s anti-competitive actions are a violation of the Sherman Antitrust Act, the Temu lawsuit claims. Temu purchased a pair of Super Bowl ads to gain consumer recognition in the U.S. and “Shein retaliated with exclusionary conduct to lock up the supply chain, and directed other unlawful conduct at Temu to undermine its ability to offer similar products at prices that are consistently lower than Shein’s,” the Shein lawsuit claims.

A group of independent fashion designers have filed a lawsuit against Shein claiming the company has stolen their intellectual property by copying, producing and distributing exact copies of their work without permission.

Have you ordered fast fashion on Shein or Temu? Let us know in the comments.

The plaintiff is represented by Edward F. Haber of Shapiro, Haber and Urmy LLP along with Philip C. Korologos, James P. Denvir and Sean P. Rodriguez of Boies, Schiller, Flexner LLP.

The Temu lawsuit is Whaleco Inc. v. Shein Services LLC, et al., Case No. 1:23-cv-11596, in the U.S. District Court for the District of Massachusetts.

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