Chapter 22: Comments on the MOFCOM’s decision on Coca-Cola/Huiyuan
On 18 March 2009, the MOFCOM released its decision regarding the merger of Coca-Cola and Huiyuan. According to the decision, the MOFCOM had conducted a 30-day initial investigation of this market concentration case. After an additional three-month investigation, the MOFCOM concluded that this merger will have the following negative outcomes. First, Coca-Cola’s dominant position over the carbonated drinks market would be extended to the fruit juice market, resulting in the elimination or restriction of current fruit juice beverage competitors, thereby harming consumers. Secondly, brand is a key factor influencing effective competition in the beverage market. After this merger, Coca-Cola, through control of Minute Maid and Huiyuan, two famous brands, would significantly increase its control in the fruit juice market. With Coca-Cola’s dominant position in the carbonated drinks market and its corresponding influences in the fruit juice market, the proposed concentration would increase the entry barriers to potential new competitors into the fruit juice beverage market. Thirdly, this merger would squeeze out the small and middle-sized companies in the fruit juice market, limit the ability of domestic companies to compete and independently innovate in the fruit juice market, damage the existing competitive pattern of the domestic fruit juice market, and harm the continued healthy development of this market. In order to reduce negative influences, the MOFCOM initiated discussions with Coca-Cola on conditions and restrictions for the merger, and required that Coca-Cola produce a viable implementation plan.
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