China's Ministry of Commerce (MOFCOM) has decided to start an anti-dumping investigation into imported wine from Australia, it announced Tuesday.

The investigation by MOFCOM will look at imports of wine from Australia in containers holding two liters or less in 2019, the ministry said in a statement. It would also examine any damage to the Chinese wine industry from 2015-19.

The probe was requested by the Chinese Alcoholic Drinks Association, which asked the regulator to look into 10 Australian wine producers, including Treasury Wine Estates, the maker of Penfolds, and Accolade wines.

Shares of Treasury, the world's biggest standalone winemaker, fell as much as 20 percent as the industry and investors worried about the prospect of a possible import tax on Australian wine.

The company said in a statement it would cooperate with any requests for information from Chinese or Australian authorities and remained committed to China as a "priority market."

China is the top market for Australian wine exports and the country is also Australia's largest trading partner, with two-way trade worth 170 billion U.S. dollars last year.

The China Alcoholic Drinks Association said Australian wine producers had cut their prices and were taking market share away from local companies, which had experienced a rapid deterioration in production and operating conditions.

China's imports of Australian wine more than doubled to 12.08 million liters between 2015 and 2019, the association said. The price of imports fell 13 percent to 6,723 U.S. dollars a kiloliter, it added, citing Chinese customs data.

Over the same period, the market share of domestic wine fell from 74.4 percent to 49.6 percent, it said.

Australian industry figures show the country sells more wine to China than France, exporting 795 million U.S. dollars of product in 2019/20 for a 37 percent market share of China's imports by dollar value.

"This is a normal anti-dumping investigation. It is understood that the Chinese authority received an anti-dumping investigation request submitted by the domestic wine industry on July 6 this year," Chinese Foreign Ministry claimed.

"After legitimate review, the application was deemed to meet the legal requirements and the investigation was initiated on August 18. China will carry out relevant investigations in a fair and just manner."

China's position has been "clear and coherent" on developing bilateral ties with Australia. Maintaining and developing a healthy and stable China-Australia relationship is in the interests of both countries, but this requires joint efforts, according to the ministry.

"The two countries should meet each other halfway in line with the principles of mutual respect, equality, and mutual benefit and resolve their core differences through dialog rather than confrontation."

(With input from Reuters)