Corporate & Securities Law

More From China on Coca-Cola

By David Fischer

Last week, China rejected on antitrust ground Coca-Cola?s acquisition of the China Huiyuan Juice Company.  Today, the AP (via the NY Times) reports:

In its first detailed explanation of the March 18 ruling, the commerce ministry said it looked at China?s beverage market and concluded that Coca-Cola?s dominance in carbonated drinks could be used to promote sales of Huiyuan Juice Group, stifling competition and leading to higher prices.

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?Whether Huiyuan is a national brand is not a factor that needs to be considered in an antimonopoly investigation and has nothing to do with the commerce ministry?s rejection of this acquisition,? a ministry spokesman, Yao Jian, said in statement on its Web site.

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Coca-Cola?s ?dominant position in the carbonated beverage market could be transferred to the fruit juice market,? Mr. Yao said. ?This would seriously cripple or deprive other fruit juice producers of the ability to compete. It would harm competition in the fruit juice market, forcing customers to accept higher prices and fewer products.?

He said Coca-Cola might have used its carbonated beverage brands to promote Huiyuan or bundle products together for sale.

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The company [Coca-Cola] has a 16 percent share of China?s soft drink market ? which also includes fruit and vegetable juices, bottled teas and sports drinks ? and adding Huiyuan would have raised that to 18 percent, according to the consulting firm Euromonitor.

Full post as published by Antitrust Review on March 26, 2009 (boomark / email).