Monopolio

COCA-COLA AND HUIYUAN (A): ANTITRUST BARRIERS TO BUYING TOP CHINESE BRANDS

Frankly, we welcome the new Anti-Monopoly Law as it brings transparency to acquisition cases in China. We welcome the transparency. ... We understand the environment we invest in. We have estimated the market shares of Huiyuan and Coca-Cola, which have reached the criterion [for antitrust review], so we understand it has to be done.

- Norwell Coquillard, chairman of American Chamber of Commerce in China1

On 3 September 2008, the Coca-Cola Company (“Coca-Cola”) escalated the cola war in China by announcing its plan to acquire the country’s biggest domestic juice manufacturer, China Huiyuan Juice Group Limited (“Huiyuan”). This acquisition would boost Coca-Cola’s market share in the country’s juice sector from 12.7% in 2008 to 20.2%,2 and would allow the company to gain a leg up against its archrival PepsiCo Inc (“PepsiCo”) in cracking the huge Chinese beverage market. Because Huiyuan fruit juice was one of China’s prominent home- grown brands, this news immediately triggered a public outcry from patriotic nationalists against Coca-Cola’s acquisition. Local juice manufacturers also protested, claiming that Coca-Cola’s enhanced market position would drive them out of business.

This deal was announced just one month after the enactment of China’s Anti-Monopoly Law. Some analysts worried that it might not be approved by the Ministry of Commerce (“MOFCOM”), the regulatory body for M&A control. In mid-December 2008, MOFCOM extended the examination period of this case by three months and planned to host a public hearing in late December that would be attended by key industry players. Coca-Cola’s management was mulling over what strategies it should pursue to convince the Chinese authorities of the benefits of this acquisition for consumers and the society as a whole, so that the deal would be approved.

1 China Daily (11 September 2008) “China Insists on Principle of Market Economy on Huiyuan Takeover”. 2 Euromonitor (May 2010) “Fruit/Vegetable Juice—China”.

Penelope Chan prepared this case under the supervision of Professor Ping Lin and Dr Wen Zhou for class discussion. This case is not intended to show effective or ineffective handling of decision or business processes.

© 2011 by The Asia Case Research Centre, The University of Hong Kong. No part of this publication may be reproduced or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise (including the internet)—without the permission of The University of Hong Kong␣

Ref. 11/486C

1

This document is authorized for use only by GRETEL GARCIA MONTES DE OCA in Econom?a para la Toma de Decisiones Enero 2013 taught by Alfredo Gonzalez Cambero from January 2013 to April 2013.

HKU946

11/486C For the Ceoxca-cCollua asndiHvueiyuaun (sA):eAnotitrufstGBar.rieGrs tAo BRuyinCg TIoAp ChMineOse BNranTdsES DE OCA Regulatory Control over M&A

Reasons for Regulatory Control of Mergers and Acquisitions

Companies pursued mergers and acquisitions for various reasons. Some acquisitions allowed for

...