Updated: 2009-03-18 15:59
BEIJING -- China has rejected Coca-Cola Co.'s $2.3 billion bid to buy a major Chinese juice producer, the Ministry of Commerce (MOC) announced Wednesday.
The purchase of China Huiyuan Juice Group, the nation's largest juice maker, would have been the biggest foreign acquisition of a Chinese company to date.
The proposed purchase was rejected on anti-monopoly grounds, MOC said on its website. "The bid may harm competition...in China's juice market."
The ruling is the first of its kind since China promulgated its anti-monopoly law last August.
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 Huiyuan juice and bottles of Coca-cola on sale at a supermarket in Yichang, Hubei province, on September 3, 2008. [Xinhua] |
Shares of the Hong Kong-listed Huiyuan were suspended from trade after plunging 20 percent amid speculation Coca-Cola may abandon its bid for the company.
The juice maker's stock last traded 19.4 percent lower at HK$8.3 before being halted early in the session.
Coca-Cola Co. may abandon the deal as doubts rise that Chinese regulators would want the beverage giant to relinquish the Huiyuan name, a well-known brand throughout China.
The deal itself is set to expire around March 23 unless granted approval, according to terms set by the two companies. However, they could agree to extend or renew the deal.
Coca-Cola offered on September 3 to buy Huiyuan for HK$17.92 billion (US$2.3 billion) in cash. Rival juice producers have since warned that the acquisition would give Coca-Cola too dominant a position in China's beverage market.
In late September Coca-Cola filed with the MOC for anti-trust approval. According to the anti-monopoly law, mergers or acquisitions must go through an anti-monopoly review if the deal involves a company with a revenue of over 400 million yuan in China or all companies involved have a combined revenue of 10 billion yuan worldwide.
Huiyuan's founders and major shareholders already had endorsed the sale.
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A law for competition
(China Daily)
Updated: 2008-08-01 07:22
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Upholding fair competition, China's first anti-monopoly law, that takes effect today, ushered in a new chapter in the development of the country's market economy.
The new law, dubbed the "constitution for the market economy", will be a real boon to Chinese consumers by putting various monopoly practices under control.
However, Chinese legislators still have no time to breathe easy even after putting into practice the law which was proposed 15 years ago and was not passed until last year.
As a basic framework for building a fair, uniform and national legal system for competition, the new law lays out only certain principles guiding anti-monopoly work. Lack of specific regulations and guidelines for practice will make it hard to enforce the law efficiently.
Hence, law-makers should press ahead with follow-up legislation to bring into full play the role of the anti-monopoly legislation in protecting consumers.
A full-fledged anti-monopoly law is particularly needed as the country makes big strides to develop its market economy after three decades of remarkable economic reforms and opening-up.
On the one hand, the anti-trust law will help create a level playing field for all enterprises by preventing dominating companies from abusing their superior market positions.
A dominant market position itself does not make a company a subject of anti-monopoly measures. It is only those companies that make use of their dominance to keep or seize a major share of the market that should be punished by the law.
It is believed that such a law to control monopoly and restrictive practices in favor of competition will largely contribute to improving the overall efficiency of the market economy in China.
On the other hand, better protection of consumers against monopoly practices will help boost domestic consumption to facilitate changes in the growth pattern.
To pursue sustainable growth, China has been trying hard to shift away from its reliance on investment and export for growth. But one of the impediments that discourage consumers from loosening purse strings is unfriendly consumption climate caused, in particularly, by those State firms in the monopoly sectors.
It is hoped that legislators can quickly flesh out the new law with substantive rules against anti-competition conducts.
(China Daily 08/01/2008 page9)
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