China's Statement Blocking Coca-Cola Huiyuan Deal
Wall Street Journal
March 18, 2009

The following is a complete translation of the Chinese Ministry of Commerce's statement announcing its decision to block Coca Cola Co.'s proposed acquisition of China Huiyuan Juice Group Ltd. A few tips to help decode the sometimes dense language: "concentration" is legal jargon for a merger or acquisition, "antimonopoly" is the term preferred in the Chinese legal tradition for what in the U.S. is usually called "antitrust."

On September 18, 2008, the Ministry of Commerce received the anti-monopoly notification materials for a concentration of business operators, Coca-Cola Co.'s acquisition of China Huiyuan Co. After additional materials were submitted to meet the requirements of Article 23 of the Antimonopoly Law, the Ministry of Commerce opened its review of this concentration on November 20 and, based on this preliminary review, on December 20 decided to conduct a further examination.

In accordance with the relevant provisions of the Antimonopoly Law, the Ministry of Commerce reviewed various aspects of this concentration including: market share and market control, the degree of market concentration, the impact on market access and technological progress, the impact on consumers and other business operators, and the impact of brands on market competition in the juice market. The review was in strict compliance with relevant laws and regulations. The views of parties concerned were fully aired during the review process.

Through its review, the Ministry of Commerce found that this concentration will have an adverse impact on competition. After the concentration is completed, Coca-Cola could use its market dominance in carbonated soft drinks to limit competition in the market for juice through tying, bundling or other exclusive transactions, resulting in consumers being forced to accept higher prices and reduced variety. At the same time, because brands can restrict entry to the market, it would be hard for the threat of potential competition to remove the restrictive effect on competition. In addition, the concentration will also reduce the room for small and medium-sized juice companies to survive, and will have an adverse effect on the structure of competition in China's juice market.

In order to reduce this concentration's adverse effects on competition, the Ministry of Commerce negotiated with Coca-Cola Co. about adding restrictive conditions, and asked it to submit a workable solution. Coca-Cola Co. expressed their views on the issues raised by the Ministry of Commerce, and submitted a preliminary resolution proposal and a revised proposal. After an assessment, the Ministry of Commerce concluded that the revised proposal still could not effectively reduce this concentration's adverse impact on competition. Therefore, under Article 28 of the Antimonopoly Law, the Ministry of Commerce decided to forbid the concentration.

The goal of antimonopoly review is to protect fair market competition, and to safeguard the interests of consumers as well as the public interest. Since the Antimonopoly Law went into effect on August 1, 2008, the Ministry of Commerce has received 40 notifications of a concentration of business operators. In accordance with the law, 29 of these cases have been reviewed. Of the 24 cases that have been completed, 23 were approved unconditionally. For the one concentration that had the effect of eliminating or limiting competition, the Ministry of Commerce negotiated with the notifying party, who made commitments and proposed a plan to reduce the effects on competition. The Ministry of Commerce approved this concentration after adding restrictive conditions to reduce the adverse effect on competition.

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