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Protecting consumers

(China Daily)
Updated: 2009-03-20 07:41

The Ministry of Commerce must have thoroughly considered the far-reaching implications of its decision to reject the US$2.4-billion acquisition of Huiyuan Juice, China's leading juice maker, by Coca-Cola.

At a moment when the country's absorption of foreign direct investment is declining in lockstep with the global economy and many domestic companies are eagerly expanding abroad, it cannot have been an easy decision.

Chinese regulators, whose first and foremost priority is the interests of consumers, have rejected five of the 29 such cases it has investigated under the Anti-Monopoly Law since last August.

The latest deal would have been the largest ever buyout of a Chinese firm by a foreign rival.

However, upholding the rights of consumers, the Ministry of Commerce delivered its first rebuff under the country's new anti-trust law.

"If the acquisition went into effect, Coca-Cola was very likely to reach a dominant position in the domestic market and consumers may have had to accept a higher price fixed by the company, as they would not have much choice," the ministry said in a statement.

When the country's first Anti-Monopoly Law took effect last year after more than a decade of discussion, it was promoted as a "constitution for the market economy" and a boon for Chinese consumers that would stop the formation of monopolies.

A lack of specific anti-monopoly regulations and guidelines once raised fears about the emergence of such corporate strangleholds.

Therefore it is reassuring to know Chinese regulators have made consumer rights a top priority in this anti-trust filing.

Coca-Cola's bid for Huiyuan was widely regarded as the first major test to the new Anti-Monopoly Law.

The Ministry of Commerce should put the interests of consumers above all other concerns.

While we're still waiting for regulators to publicize a detailed explanation of their decision, consumer voices have been conspicuously absent from this big anti-monopoly case.

Both Coca-Cola and Huiyuan are extremely popular brands among Chinese, who pay scant regard to whether their favorite-tasting beverage is made by a Chinese or foreign firm.

The alliance of the two firms would have increased pressure on other small companies in these specific drink markets.

But a dominant market position does not necessarily come at a cost to consumers just as long as Chinese regulators can prevent any abuses stemming from it.

Still, consumer interests are the main reasons for enacting anti-monopoly laws and regulators have shown their willingness to wield their newfound power to protect them.

(China Daily 03/20/2009 page8)