Gaopeng is accused of selling fake Tissot watches. [CFP]

Customers who unwittingly bought fake watches from the group-buying website Gaopeng are set to sue the company following confirmation from China's commerce watchdog that the website had sold them fake luxury watches.

Gaopeng, a joint venture between the world's largest daily deal site Groupon and China's top internet firm Tencent Holdings sold customers Tissot watches on its website for 690 yuan ($109). The luxury Swiss watches have an original retail price of more than 3,000 yuan ($500) and customers who received the watches from Gaopeng concluded that they were counterfeit after finding them to be of poor quality.

"After an investigation into the incident, Gaopeng found the merchant [Tianjin Jiansan Commerce and Trade Co., Ltd] had given us fake agent qualification documents and supplied fake Tissot watches," Gaopeng said in a statement.

Gaopeng stated that it has yet to receive official notification from the authorities, but confirmed that it would cooperate fully with the commerce department.

Li Peixuan, a lawyer at Beijing Huijing Law Firm, commented that Tissot could also instigate legal proceedings to sue Gaopeng and its suppliers for compensation.

China's business press carried the story above on Thursday.