A Hard Landing in the Soft Drink Market - MOFCOM's Veto of the Coca-Cola & Huiyuan Deal
Global Competition Policy Magazine, April 2009
17 Pages Posted: 30 Apr 2009
Date Written: April 29, 2009
In March 2009, China’s Ministry of Commerce (MOFCOM) vetoed the proposed acquisition by Coca-Cola of Huiyuan, a company with an important presence in the Chinese fruit juice market. This is the first time that MOFCOM has prohibited a transaction under the Anti-Monopoly Law (AML), in effect since August 2008.
MOFCOM gave three reasons for blocking the transaction. First, in its view, Coca-Cola might be able to leverage its dominant position in the market for carbonated soft drinks into the fruit juice market. Second, MOFCOM found that the addition of the Huiyuan brand name to Coca-Cola’s own fruit juice brand could increase entry barriers. Third, MOFCOM expressed concern that the transaction could negatively affect the ability of domestic small- and medium-sized companies to compete.
This paper critically examines several interesting aspects of MOFCOM’s prohibition decision. In particular, it discusses the insufficient degree of transparency which characterizes MOFCOM’s merger control regime at present. Then, an attempt to analyze MOFCOM’s substantive antitrust reasoning in the decision is made. Finally, the paper focuses on the actual or potential influx of non-competition policy objectives into MOFCOM’s assessment.
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