Danone appeals for more law suits

SHANGHAI: French food conglomerate Group Danone SA yesterday asked the boards of its joint ventures with Chinese partner Wahaha to file lawsuits against its former chairman for what it said was his breach of interests regarding the ventures, taking their acrimonious dispute to a new level.

In a letter sent to the 39 joint ventures with Wahaha, Danone said it had asked the boards to file lawsuits against Zong Qinghou, the former chairman of the ventures.

The letter asserted Zong, without consent from the boards or shareholders, had "directly or indirectly invested in and operated several companies that were competing with the joint ventures".

Zong's actions, which Danone said were "aimed ultimately at seeking economic gain had seriously encroached upon the interests of the joint ventures and the interests of Danone as a shareholder", the food company said in a statement.

Neither Wahaha, Danone's partner and China's largest beverage maker, nor Zong were available for comment yesterday.

"In line with the relevant Chinese company laws, Group Danone SA, in written form, officially asks the boards of the joint ventures to file lawsuits with the courts against Zong Qinghou and to seek civil compensation responsibility and to protect the interests and rights of the joint ventures and shareholders," the French firm said.

"If the boards of the joint ventures fail to take action against Zong as required, Group Danone SA will officially launch relevant legal procedures," it said.

The two beverage firms have been embroiled in a dispute over their joint venture for more than three months.

Danone, which holds 51 percent of 39 joint ventures with Wahaha, has already filed lawsuits in Sweden and the United States, accusing Wahaha of breach of contract by using the Wahaha brand on products sold outside the joint ventures.

Wahaha filed an arbitration claim last month seeking to terminate the trademark-transfer agreement signed with the joint ventures in 1996, claiming they never formally or legally transferred the trademark from Wahaha Group.

Danone filed a counterclaim with an arbitrator in Hangzhou, where Wahaha is based, rejecting Wahaha's statement.

Danone also said yesterday it had submitted materials to eight local industry and commerce administrations across China alleging four companies bearing Wahaha trademarks used falsified documents to secure registration.

It said the four companies had used a counterfeited signature of an American-Chinese to register their entities.

(China Daily 07/20/2007 page6)