The Huiyuan Case Aroused More Concern About China’s AML
On March 19, Chinese Ministry of Commerce rejected Coca-Cola’s bid to takeover China Huiyuan Juice Group, claiming that this concentration may generate adverse effect on the competition in China’s juice market. The Huiyuan Case is the first one that has not been permitted since China’s Anti-monopoly law took effect on August 1, 2008.
The Ministry’s statement gave three reasons explaining why the merger was not allowed. First, after the concentration, Coca-Cola is able to use its dominance in carbonated soft drinks market to limit competition in juice market by way of tying, bundling or other exclusive transactions, therefore harming the consumer’s benefits; Second, after the concentration, Coca-Cola is able to use the brands it controls to restrict entry into the market, then the potential competitors may feel hard to remove the restrictive effect on competition; Third, the concentration will reduce the survival room for small and medium-sized juice enterprises, and will generate adverse impact on the structure of competition in China’s juice market.
As the first un-permitted case since the implementation of China’s AML, the Huiyuan Case has no doubt caused much concern and contention regarding the AML.
Some people say that the AML began to exert its influence on competition as started from the Huiyuan Case. Considering the consumer’s interests and the country’s industrial safety, more restriction will be placed on key industries merger. The opposite views say that the beverage market is fully competitive, and should not be interfered with by administrative means. Although the Ministry gave three reasons to explain the rejection, however it was not able to delineate the different products, and the conduciveness of the up-stream and down-stream industries. Besides, trade protectionism is also a great concern over this case. Many people worried that the case may influence China’s foreign investment policy. But some researcher pointed out that the reasons of rejection was grounded on market share, one can not reasonably get the inference that China practiced trade protectionism in the foreign investment field. On the contrary, the rejection shows that China is ceasing the “Super National Treatment” practice and seeking to establish an equal and fair market environment. The rejection decision was rather, to a greater extent, a technical operation grounded on the AML than a matter of trade protectionism or the restriction on the use of foreign investment.
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