Coke to test Chinese anti-trust law

Coca ColaÔÇÖs $2.5 billion bid for Chinese juice company Huiyuan will be the first case to be scrutinized by Chinese competition authorities under the country's new antitrust laws.   ┬á Coca Cola is keen to increase its presence in ChinaÔÇÖs fast growing drinks market, but the potential sale of China Huiyuan Juice Group Ltd. to an overseas company has stirred up nationalist opposition. ┬á┬á Coke agreed last week to pay HK$12.20 per share for Huiyuan, in a deal which values the Beijing-based juice producer at around HK$17.9 billion ($2.3 billion). According to research firm AC Nielsen, Huiyuan which has a 44 percent market share by sales value in China's pure juice sector.┬á┬á Irrevocable undertakings for acceptance of the offer have been given by three shareholders, representing approximately 66 percent of Huiyuan shares. ┬á┬á The anti-monopoly law took effect on August 1st, but details of what companies must do to comply with it have not been made clear by Chinese authorities. Foreign business groups have nevertheless welcomed it as a step toward clarifying commercial conditions in China. ┬á┬á China is the world's leading destination for foreign investment, but the acquisition of established companies is politically sensitive. ┬á┬á According to a government notice dated August 3rd, mergers are subject to an anti-monopoly review if the company created by the deal would have revenues of 400 million yuan ($58 million) in China or 10 billion yuan ($1.3 billion) worldwide.┬á┬á The law says mergers will be blocked if they hurt competition, but gives no definition of an acceptable level of market share.┬á┬á Atlanta-based Coca-Cola entered the Chinese market in 1979 and has invested heavily in it since. It was a top sponsor of the Beijing Olympics in August and used advertising featuring Chinese athletes to win over consumers.┬á┬á Global companies, eager to expand into China's thriving domestic market, will be watching developments closely.  ┬á┬á┬á┬á*┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á