Coca-Cola purchase of China's Huiyuan fails to pass antimonopoly review
www.chinaview.cn 2009-03-18 14:48:52   Print

    BEIJING, March. 18 (Xinhua) -- The Ministry of Commerce (MOC) announced on Wednesday that Coca-Cola's bid to acquire China Huiyuan Juice Group failed to meet the country's anti-monopoly law. 

    The MOC said on its Web site that the investigation, which "exactly followed relative laws and regulations," found the transaction may disturb market competition.

The Ministry of Commerce (MOC) announced on Wednesday that Coca-Cola's bid to acquire China Huiyuan Juice Group failed to meet the country's anti-monopoly law.

The Ministry of Commerce (MOC) announced on Wednesday that Coca-Cola's bid to acquire China Huiyuan Juice Group failed to meet the country's anti-monopoly law. (Xinhua/Yang Lei)
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    "If the acquisition of Huiyuan went into effect, Coca-Cola is very likely to take a dominating position in the domestic market and the consumers may have to accept the high price fixed by the company as they don't have more choices," the statement of the MOC said.

    Coca-Cola applied anti-trust investigation to the MOC in September. The MOC officially launched the investigation on Nov. 11 to determine whether the acquisition of Huiyuan would harm other rivals and consumers rights or hamper technological development.

    The acquisition of Huiyuan was the first major deal to test China's new anti-monopoly law, which took effect on Aug. 1, 2008.

    The MOC's statement said it has communicated with Coca Cola several times and suggested it to make changes in the acquisition document so that it would not disturb market competition. Coca Cola has not yet satisfied request.

    Experts said the decision to reject Coca Cola's acquisition will cost the world's largest soft drink maker the opportunity to boost its shares of China's juice market by more than 20 percent.

    Wednesday morning, market talk spread that Coca Cola would drop the acquisition of Huiyuan. Coca-Cola's Hong Kong-based spokesman Kenneth Kaerhoeg declined to comment.

A driver delivers Coca-Cola products to stores in Boston, Massachusetts, April 24, 2008. (Xinhua/Reuters File Photo)
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    The market talk has sparked a big price drop for Huiyuan's shares in the Hong Kong stock market. The stock suspended trading 13 minutes after the market opened Wednesday morning. It fell 19 percent to 8.30 HK dollars.

    Zhang Junsheng, an economics professor at the University of International Business and Economics said this decision aims to maintain competition and avoid potential hostile competition.

    "This move will help both domestic and overseas juice makers to compete fairly, and is good for the development of the companies in the long run," he said.

    Coca-Cola offered to buy Huiyuan, the nation's largest juice maker, for 17.92 billion Kong Kong dollars (2.3 billion U.S. dollars) in cash on Sept. 3.

    It said on March 6 it would invest more than 2 billion U.S. dollars over the next three years in China to build new bottling plants and distribution infrastructure.

    The MOC has received 40 anti-trust applications from companies since last year when the anti-monopoly law was passed. It has investigated in 29 of the total and draw conclusion for 24.

Editor: Sun
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