By Nick Kostov

PARIS — The French parliament passed legislation Monday imposing fines on ultrafast fashion retailers, part of the country's effort to curb the environmental impact of cheap, high-volume clothing and rein in Chinese e-commerce giants that have flooded Europe with low-price apparel.

Shein and other Chinese ultrafast fashion retailers, alongside marketplaces such as Temu, have gained ground in France by offering trendy styles at cutthroat prices, putting pressure on the country's traditional retailers and prompting calls for tighter regulation.

The new law establishes criteria for fining companies that release high volumes of new products over short time periods at prices far below the cost of repairing them. Under the law, companies deemed "ultrafast fashion" face fines as high as 6 euros per product this year, rising as high as 10 euros per item in 2030. The law also bans advertising and influencer promotions by companies designated as ultrafast fashion.

"Fast fashion is undermining the French textile industry," Sen. Michaël Weber, a socialist, said before the vote.

Shein has rejected being characterized as an ultrafast fashion retailer, saying that its model of producing small initial batches and replenishing inventory only when demand is proven is "part of the solution, not the problem." Temu, for its part, describes itself as an online marketplace that connects consumers directly with manufacturers, a model it says helps keep prices low.

Following Monday's vote, Shein said it was reviewing the legislation and pointed to concerns previously raised by the European Commission. While the commission broadly backed the bill's environmental objectives, it questioned parts of the proposal, including how ultrafast fashion would be defined, the new obligations placed on online marketplaces and the advertising ban.

The measure makes France the first European country to specifically target ultrafast fashion. While the European Union has adopted broader rules on textile sustainability and online marketplaces, France's law is the first to directly target the business models of companies such as Shein and Temu.

France's move comes as governments across Europe grapple with the rapid rise of Chinese e-commerce platforms. In Italy, lawmakers from Prime Minister Giorgia Meloni's coalition have proposed legislation that would introduce an environmental rating system for clothing, restrict advertising by ultrafast fashion companies and impose a levy on low-value parcels shipped from outside the EU. The proposal has yet to be approved by parliament.

Last week, Germany joined France and the Netherlands in calling on the European Commission to tighten EU-wide rules on ultrafast fashion. "Producing cheap disposable clothing can no longer be a competitive advantage," said Jochen Flasbarth, state secretary at Germany's Environment Ministry.

The EU generated nearly seven million tons of textile waste in 2022, about 16 kilograms per person, according to the European Environment Agency.

In November, Shein sought to deepen its presence in France beyond online sales by opening its first permanent store inside the BHV Marais department store in the heart of Paris. The opening drew scores of protesters as well as long lines of shoppers.

The same day, the French government sought to suspend Shein's website after authorities found childlike sex dolls and weapons being sold by third-party vendors on the platform, though French courts later rejected the request. Shein said it removed the listings and temporarily suspended third-party marketplace sales in France.

Earlier this month, BHV Marais said it would end its partnership with Shein, seven months after opening the company's first store in France. The decision followed a change in ownership at the department store, whose incoming management said the tie-up had been a strategic mistake. Shein said that the collaboration had always been intended as a limited-term pilot and that it had driven significant customer traffic to the store.

Shein, based in Singapore, was founded in China and sources most of its products from there.

While Shein is best known in the West for selling its own brand apparel, in recent years it has expanded into a marketplace for external sellers, similar to Amazon.com.

French lawmakers have walked a tightrope in calibrating the legislation to cover the rapid production cycles of Shein and Temu without affecting Europe's fast fashion giants such as Zara, H&M and Mango, whose product cycles are generally slower.

Write to Nick Kostov at nick.kostov@dowjones.com