China rejects Coca-Cola’s bid to buy Chinese firmMarch 18th, 2009 - 5:23 pm ICT by IANS
Beijing, March 18 (Xinhua) Coca-Cola’s bid to acquire China Huiyuan Juice Group has failed to meet the country’s anti-monopoly law, the Ministry of Commerce (MOC) announced Wednesday.
The MOC said on its website that the investigation, which “exactly followed relative laws and regulations”, found the transaction may disturb market competition.
“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 MOC statement said.
Coca-Cola applied for anti-trust investigation to the MOC in September. The MOC officially launched the investigation 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 came into effect 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.
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.
On 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.
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) in cash Sept 3.
It said March 6 it would invest more than $2 billion 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.
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