KFC wins China payout over mutant chicken rumors

A customer walks out of a KFC restaurant in Shanghai, China, October 9, 2015. REUTERS/Aly Song/Files

SHANGHAI (Reuters) - A Shanghai court has fined three local tech firms for helping spread rumours about Yum Brands Inc’s KFC fast food chain that included doctored photos of deformed chickens and allegations the birds had six wings and eight legs.

In a statement on its official microblog, the Xuhui District People’s Court said Yingchenanzhi Success and Culture Communication, Taiyuan Zero Point Technology and Shanxi Weilukuang Technology had “damaged KFC’s reputation” and “caused it economic losses” by permitting the allegations to be posted on their social messaging accounts.

The companies were ordered to make an official apology and fined a combined 600,000 yuan ($91,191), an amount that fell far short of the 1.5 million yuan ($227,977) Yum had asked each company to pay in damages.

“We brought suit against these individuals for making false statements about the quality of our food and we are pleased with the outcome,” China-based Yum spokeswoman Cindy Wei said in emailed comments sent to Reuters.

Reuters was unable to find contact numbers or websites for the three companies fined by the court.

Yum is battling to turn around its fortunes in China, its largest market, where its sales have taken a serious hit after a series of food safety scares since the end of 2012. The firm is planning to spin off its China unit by the end of this year.

KFC China brought the suit against the firms in June last year for using ten accounts on Tencent Holdings Ltd’s popular messaging platform WeChat to spread the defamatory posts.

Food safety is a major concern in China, with frequent scandals ranging from recycled “gutter oil” and years-old “zombie meat”, to dairy laced with industrial chemicals.

A food scandal in 2014 that dented Yum and rival McDonald’s Corp came to a close earlier this week when a Chinese court fined U.S. food supplier OSI Group and handed jail terms to ten of its executives over allegations it had reused returned food products to avoid losses.

Reporting by Adam Jourdan and Engen Tham; Additional reporting by SHANGHAI newsroom