Legal News

What Does Antitrust Law in China Look Like? Coke?s About to Find Out

By Ashby Jones

Earlier this week, word broke of Coca-Cola’s intent to drop $2.4 billion on a Chinese juicer called China Huiyuan Juice Group Ltd. But it’s not a done deal, not until Chinese antitrust regulators give it the a-ok.

Will the deal pass muster? It’s anyone’s guess. According to Thomson Reuters, the deal represents the largest-ever foreign takeover of a Chinese company. And China’s fledgling antitrust law, which took effect last month, hasn’t been tested. According to a WSJ story out today, the deal represents the first opportunity for Chinese regulators to apply the new law.

Although Chinese officials have indicated that in regard to the application of the new antitrust law, they will lean toward international best practices, implementation rules clarifying the new law have been slow to come out. It isn’t clear whether the government agencies involved would be equipped to handle the case so soon.

Antitrust officials who scrutinize deals involving Chinese companies will consider the size of the market and the combined company’s position in it, said Liu Cheng, an attorney in the Beijing office of law firm DLA Piper. In addition, Beijing regulators will consider more esoteric issues, such as whether Huiyuan’s position as a nationally famous brand — a status granted by the government — would be affected.

“There are no clear standards,” Mr. Liu said of the national-brand issue. “It’s really on a case-by-case basis and really hard to estimate.”

Coke has indicated in its statements that it is willing to meet regulators’ requirements. “We’ve clearly communicated that we will use the expertise that we have as global beverage company to further develop the Huiyuan brand,” a Coke spokesman said Thursday.

Full post as published by Law Blog - WSJ.com on September 05, 2008 (boomark / email).