A man holds Kweichow Moutai Liquor and Wuliangye Liquor at a supermarket in Beijing, capital of China, Feb. 19, 2013. Two Chinese liquor makers, Kweichow Moutai Co. Ltd and Wuliangye Yibin Co. Ltd, have been fined 449 million yuan, equivalent to 1 percent of all sales of the two companies throughout 2012, for their involvement in price monopoly activity. (Xinhua/Li Xin)
Regulators have hit Moutai and Wuliangye, two of China's liquor giants, with record penalties of 449 million yuan (71.9 million U.S. dollars) for price fixing, a punishment hailed by Chinese netizens.
The two booze makers were ordered to pay 247 and 202 million yuan respectively in fines, China's top economic planning body said on Tuesday.
The fines accounted for one percent of total sales revenue of the two companies in 2012, said the National Development and Reform Commission (NDRC).
It marks the harshest punishment since China's first anti-monopoly law was enacted in 2008, followed by fines slapped on Samsung, LG and four Taiwanese flat panel makers of 353 million yuan in January for the same reason.
The move became one of the hottest topics of discussion on the Internet on Tuesday, with most netizens supporting the punishment.
"The fine is not just about the money record, but punishing giant companies. No matter how big they are, they will face penalties once their market behavior is found to be illegal," said a user with the screen name "Yu Fenghui" on Sina Weibo, the Chinese equivalent of Twitter.
The NDRC said in an interview with China Securities Journal later on Tuesday that punitive measures for the two companies were still being formulated.
Moutai and Wuliangye stocks slumped 0.99 percent and 1.55 percent respectively to close at 177.92 yuan and 24.81 yuan on the Shanghai and Shenzhen bourses on Tuesday.
However, some Weibo users think the punishment could be harsher considering the firms' profits and market share.
"It's too little for the two giants. Punitive fines should go after confiscation of illegal profits," said one Sina Weibo user.
"It's harsh in terms of the fine amount, but gentle in terms of the portion they are currently holding," said another.
Under China's anti-monopoly law, a company can be fined one to ten percent of its total sales revenue of the previous year plus see its illegal profits confiscated if found guilty.
The fines take up about two percent of the net profit of Moutai and Wuliangye in 2012, which are estimated to have reached 13.1 and 9.5 billion yuan respectively.
The punitive measures came after regulators investigated and found in January that the two firms were involved in a price monopoly.
Some other netizens urged regulators to impose tougher punishment on companies for similar illegal conduct and expand supervision of other potentially monopolist sectors such as telecommunications and oil.
"Consumers could even sue those companies for overcharged money to be refunded, which remains rare in the Chinese mainland nowadays," said Liu Xu, a Chinese PhD candidate of law at Heidelberg University in Germany.
"Price fixing is against the interests of consumers, and the punitive measure is considered a warning to giant companies which play a dominant role in specific areas," said Xu Shiying, a professor with East China University of Political Science and Law in Shanghai.
"There will be more lawsuits started by consumers who are more aware of anti-trust laws in the future," Xu added.
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