Idaho Reporter learned today that Luckin Coffee (LKNCY), also known in China as Ruixing Coffee or Ruixing Company, is among 45 other companies fined a total of 61 million yuan (approx. $9M) for “suspected fraudulent transactions and other unfair competition behavior.”
According to investigations, from April to December 2019, in order to obtain competitive advantages and trading opportunities, Ruixing Company, with the help of a number of third-party companies, falsely increased Ruixing Coffee’s 2019 sales revenue, costs, and profit margins of related products. Marketing indicators, and from August 2019 to April 2020, widely publicized the use of false marketing data through various channels to deceive and mislead the relevant public, and violated Article 8 Paragraph 1 of the “People’s Republic of China Anti-Unfair Competition Law” The stipulation that “operators shall not make false or misleading commercial publicity on the performance, function, quality, sales status, user evaluation, honors, etc. of their products, deceive or mislead consumers” constitutes false publicity.
After investigation, 43 third-party companies including Beijing Auto World Consulting Service Co., Ltd., Beijing Shenzhou Youtong Technology Development Co., Ltd., and Zhengzhe International Trade (Xiamen) Co., Ltd. provided substantial assistance for Luckin Coffee to implement false propaganda. Violating the provisions of Article 8 Paragraph 2 of the “People’s Republic of China Anti-Unfair Competition Law” that “operators shall not help other operators conduct false or misleading commercial propaganda by organizing false transactions, etc.”, which constitutes an act of helping false propaganda .
On September 18, 2020, the State Administration of Market Supervision made administrative punishment decisions on forty-five companies involved in the case , with a total fine of 61 million Chinese yuan, which is a bit more than $9,000,000.
In response to the administrative penalty decision made by the State Administration of Market Supervision, Ruixing Coffee official said that Ruixing Coffee respects and resolutely implements the penalty decision made by the relevant state departments in this investigation, and has carried out comprehensive rectification on related issues.