China Promises Review of Coke Bid for Huiyuan

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BEIJING - China's Commerce Ministry says it will enforce anti-monopoly rules in reviewing Coca-Cola Co.'s bid to buy a major Chinese juice producer but gave no indication what factors might affect its decision.

In the first official comment on the $2.5 billion bid for Huiyuan Juice Group Ltd., a ministry spokesman quoted by the government's Xinhua News Agency late Wednesday promised to review it as soon as Coca-Cola submits an application. Coca-Cola has declined to say when it will ask Beijing for approval.

The offer will be reviewed "based on based on market economy principles and the law — opposing monopoly, but supporting regular market operation," Xinhua said, citing ministry spokesman Yao Shenhong.

Coca-Cola's offer, announced last week, sparked criticism in China of the sale of one of the country's best-known brands to foreigners. The deal is the first major test of China's new anti-monopoly law, which took effect Aug. 1.

Xinhua gave no details of what factors regulators would consider. Xinhua said Yao made the comment at a business fair in southeastern China. People who answered the phone at the ministry in Beijing on Thursday said they had no more information.

The president of the European Chamber of Commerce in China said this week foreign companies are closely watching the Coca-Cola bid to see whether regulators are swayed by political pressures.

China is the world's top destination for foreign investment, receiving $52.4 billion in the first half of this year, according to the government.

But the sale of existing companies is unusual and politically sensitive. Angry comments posted on Chinese Web sites have called for Coca-Cola's bid to be rejected.

In July, U.S. investment fund Carlyle Group dropped a 3-year-old effort to buy a Chinese manufacturer of construction equipment after opposition from rival companies and regulators.

Atlanta-based Coca-Cola's offer for Huiyuan would be the biggest foreign corporate acquisition in China to date.

The new law bars mergers that hurt competition but gives no details, leaving regulators wide discretion. State media say rival Chinese juice producers oppose the bid on the grounds the new company's market share would be too big.

"As soon as the Commerce Ministry receives the relevant application, we will immediately conduct proceedings according to the relevant regulations of the anti-monopoly law," Yao was quoted as saying.

Coca-Cola and Huiyuan say they will cooperate fully with anti-monopoly regulators but have declined to comment further on the process.

Huiyuan said Wednesday the deal is in the best interests of China's economy and rejected rumors that Coke might drop the juice maker's name, saying it promised to develop the Chinese brand.

Mergers must undergo 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.

Regulators have 30 days to issue a ruling after receiving a formal application for a merger. But they also can decide to conduct further reviews that can extend that deadline by up to 150 days.