Coca-Cola - Wall Street Journal MARCH 19, 2009 China's Coke...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Wall Street Journal MARCH 19, 2009 China's Coke Decision Threatens to Chill Investment By GORDON FAIRCLOUGH in Shanghai and CARLOS TEJADA in Hong Kong Lawyers and investment bankers said China's rejection of Coca-Cola Co.'s $2.4 billion bid for China Huiyuan Juice Group Ltd. could prompt a backlash against Chinese investing abroad as it risks chilling investment within the country. China's Commerce Ministry said Wednesday that the combined company's market power could "narrow the room for survival" of smaller players in China's beverage industry and lead to higher prices for consumers. Coke might use its dominant position in the carbonated-beverage market to restrict competition in the juice business, the ministry said. Associated Press Coca-Cola is the largest seller of carbonated soft drinks in China, with a 52.5% market share, according to research firm Euromonitor. Huiyuan, meanwhile, is China's largest maker of 100%-juice drinks, with a 33% market share. Coke also sells juice drinks, and the two companies' combined share of the fruit-and- vegetable juice market last year was 20.3%, according to Euromonitor. The ruling -- the first major test of a new antimonopoly law -- sends "a very negative message," said Lester Ross, an attorney in U.S. law firm WilmerHale's Beijing office, who wasn't involved in the deal. "I think it was driven by protectionism, fueled by popular resentment against a foreign company acquiring a popular Chinese brand." Mei Xinyu, a researcher at the Chinese Academy of Trade and Economic Cooperation, which is affiliated with the Commerce Ministry, said the ruling had "nothing to do with trade protectionism." The deal did, however, block what would have been the largest-ever takeover of a Chinese company by a foreign buyer. Merger-and-acquisition lawyers who weren't involved in the deal said the ministry's statement indicates that officials appeared to rely on broader definitions of anticompetitive harm than used by their counterparts in
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
the U.S. The ministry's statement implied that a company's overall size, in addition to its share of any given market, should be taken into account, these lawyers said. Yi Xianrong, a researcher in the finance and banking section of the government-backed Chinese Academy of Social Sciences, criticized the ministry's rejection, saying it was "groundless" given the intense competition in the industry. Lawyers and bankers said higher antitrust barriers from Beijing could further hinder companies trying to
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/06/2010 for the course ECON ECON0602 taught by Professor Qiu during the Fall '09 term at HKU.

Page1 / 4

Coca-Cola - Wall Street Journal MARCH 19, 2009 China's Coke...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online