March 23, 2009

Testing the Chinese Anti-Monopoly Law: China Blocks Foreign Acquisition of Chinese Company

Last week, the Ministry of Commerce of the People’s Republic of China blocked Coca-Cola’s proposed acquisition of a major domestic juice manufacturer (China Huiyuan Juice Group Limited) under a recently enacted Anti-Monopoly Law. This is the Ministry’s first significant decision applying the AML to a foreign acquisition of a domestic Chinese firm.

The Ministry of Commerce concluded that the acquisition would adversely affect competition in – and the development of – the Chinese juice beverage market. In particular, the Ministry raised concerns that, as a result of Coca-Cola’s strength in the carbonated beverage sector, the transaction could give rise to potential anticompetitive effects from bundling and tying practices.

Although it’s too early to predict with much certainty – since this case was complicated – this decision points to the possibility that the Ministry may be more protective of the independence of Chinese companies compared to other antitrust authorities around the world. We have posted memos regarding this decision in our “Antitrust” Practice Area.