Tag Archives: Anti-Monopoly

China’s Anti-Monopoly Law Steps Out

We do not pretend to be lawyers so a statement that China’s anti-monopoly law is a hybrid of European and U.S. models is a broad generalization. We do know that there was concern among foreign businesses when it was being introduced in 2007 that it could be used against foreign multinationals to bolster domestic industries and their acquisition of IP rights and technology, though it should be said that overall the new law was seen as a significant step forward in Chinese commercial law.

James T. Areddy and Dinny McMahon, writing in the Wall Street Journal, take last week’s divestment of Pfizer’s Chinese swine-vaccine business to Harbin Pharmaceutical as an occasion to review the use of the  anti-monopoly law two years in. They find five other examples of where the Commerce Ministry has stepped into mergers involving multinationals, blocking one of them, Coca-Cola’s $2.4 billion bid last year for Huiyuan Juice.

That was the only one in which the acquisition target was a Chinese firm. Of the other five target companies three were American, one British and one Japanese. The acquirers break down is three American, two Japanese and one Belgian. The tone of the article is that there is a lean, albeit a small one, in the direction of protecting the national interest, though that is what anti-monopoly laws everywhere tend to get used to do. That is different, too, from using the law to promote a national interest. What is clear is that Chinese anti-monopoly review is taking its place alongside those in the U.S. and, in particular, the E.U. in any big-ticket cross-border M&A.

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Coca-Cola’s Bid For Huiyuan Nixed

China is at that stage of its economic development where it is developing indigenous brands. Huiyuan, the country’s biggest maker of fruit juice, is one, and sufficiently powerful a one for Coca-Cola to bid $2.4 billion last September to acquire the Hong Kong-listed business. But what would have been the largest takeover of a Chinese firm by a foreign rival has been blocked by the Ministry of Commerce, as we suspected it would.

This deal was always seen as the first big test of the new anti-monopoly law, and the proposed combination has been nixed on the ground that it would give Coke too dominant a market share; Huiyuan has 42% of the domestic fruit juice market. But, as the FT reported, Coke had been considering abandoning the deal because regulators were insisting that it would have to give up the Huiyuan brand as it was too valuable to fall into foreign hands.

That will have been noted far beyond Atlanta.

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World Of Beer

A sidelight on our global world: Belgian brewing giant InBev is taking over the storied U.S. brewer, Anheuser-Busch. The $52 billion roll-up of roll-ups would create the world’s largest brewer and one of the five largest consumer products companies. The pair said today that they have closed the deal now it has the regulatory clearances it needs. The big ones: the U.S., the E.U. and the U.K; the last one: China. The Commerce Ministry today approved InBev’s takeover of Anheuser-Busch’s Chinese operations under the new anti-monopoly law, but put limits on future acquisitions by the combined company. Anheuser-Busch owns 27% of China’s largest brewer, Tsingtao Beer;  InBev has 28.5% of Zhujiang Beer. Anheuser-Busch InBev, as the combined company will be known, will also not be allowed to link up with the two other leading Chinese breweries, Huarun Snow Beer and Beijing Yanjing Beer. Global consolidation stops at the border.

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