The European Commission’s formal proceedings against SHEIN under the Digital Services Act

Abstract

For many Maltese shoppers, the digital retailer SHEIN (hereinafter referred to as ‘the Company’) has evolved from an online novelty into a household staple. However, the Company’s exponential growth is now facing a significant legal challenge that may become a landmark test for European digital governance.

On 17 February 2026, the European Commission initiated formal proceedings against the Company to investigate potential breaches of the Digital Services Act (Regulation EU 2022/2065) (‘DSA’). This inquiry focuses on three core areas: the dissemination of illegal content, potentially manipulative interface designs, and the transparency of recommender systems. For legal practitioners navigating the complexities of the Single Market, this case represents a key assessment of whether the EU can hold ultra-fast, high-volume retailers to the same rigorous ‘due diligence’ standards as major technology platforms.

Historical and Regulatory Context

The DSA is underpinned by the European Commission’s principle that ‘a safe internet is not an option. In Europe, it is the law.’ Fully applicable since February 2024, the Regulation aims to ensure a ‘safe, predictable and trustworthy online environment’. Unlike earlier frameworks, which were largely reactive, the DSA requires platforms to identify and mitigate risks before harm occurs.

Under Article 33 of the DSA, the Company was officially designated as a Very Large Online Platform (‘VLOP’) on 26 April 2024, because it serves more than 45 million monthly users within the Union. This designation triggers the Regulation’s most stringent obligations, requiring robust risk management systems that go beyond content removal and extend to structural safeguards across the platform. The overarching goal of these rules is to harmonise the digital market, ensuring that the legal standards applicable in the physical world are effectively enforced online.

The Catalyst

Although the Company’s growth began online, regulatory tensions intensified as the Company expanded into physical retail. The opening of its first store in Paris last November coincided with legal action by the French government, following reports of allegedly illegal products appearing on the marketplace. These reports notably highlighted the availability of prohibited weapons, such as brass knuckles and machetes, which sparked immediate concerns regarding public safety and consumer protection.

In December 2025, the French court acknowledged a ‘serious harm to public order’ but found that a three-month suspension of the platform would be disproportionate. Instead, the court issued an injunction, prohibiting the Company from resuming the sale of non-compliant products. This dispute heightened scrutiny of the Company’s systemic safeguards. Recognising that these issues were not isolated to France, the European Commission stepped in to exercise its powers under the DSA. Building on three formal requests for information sent to the Company throughout 2024 and 2025, the Commission officially launched formal proceedings to assess compliance across the EU.

Core Allegations

The Commission’s investigation is built on three primary legal concerns, each corresponding to specific mandates within the DSA:

1. Illegal Content and Product Safety (Articles 34 and 35) – The Commission is assessing whether the Company’s systems adequately detect and remove illegal content, including non-compliant products and material involving child sexual abuse (CSAM). Article 34 requires VLOPs to diligently identify systemic risks, while Article 35 mandates the implementation of ‘reasonable, proportionate and effective’ mitigation measures.
2. Manipulative Interface Designs (Article 28) – A central concern involves whether the Company’s point-based reward systems and gamified features may exploit behavioural tendencies, particularly among minors, potentially in breach of Article 28. The Commission is specifically investigating ‘addictive design’ elements, evaluating whether these features negatively impact the well-being of users by encouraging excessive engagement.
3. Algorithmic Transparency (Articles 27 and 38) – The DSA requires VLOPs to provide transparency regarding the algorithms that determine which products are displayed to users. The Commission is investigating whether the Company provides sufficient transparency regarding the parameters of its recommender systems and whether users are offered a non-profiling-based option.

Practical Implications

The Commission’s enforcement powers are extensive. Should the investigation confirm intentional or negligent infringements, Article 74 of the Regulation allows for the imposition of fines not exceeding 6% of the provider’s total worldwide annual turnover. Additionally, under Article 51, authorities may exercise powers to order the cessation of infringements and require the Company to fundamentally alter its business model.

Crucially, the principle of the presumption of innocence applies and remains paramount. The formal opening of proceedings does not prejudge the final outcome, rather, it marks the beginning of a rigorous, evidence-based process to determine compliance.

Conclusion

We are currently navigating an era where AI-driven shopping and ultra-fast retail often move faster than the legislative process. This investigation marks a clear turning point in how the EU applies the DSA to high-volume digital retailers, addressing a post-pandemic reality where online shopping is no longer an alternative but the primary mode of consumption. It serves as a warning to global retailers that access to the European market is contingent upon the respect of European rights.

Disclaimer: Ganado Advocates is responsible for contributing to this law report but was not in any way involved as legal advisor for the parties in the judgement being covered in this law report. This article was first published in ‘the Independent’ on 05/03/2026.