Coca-Cola and China’s Huiyuan Juice Group Ltd $2.4 billion deal looks like it is set to be the first major merger test for the China’s new AML. This WSJ story gives some sense of market shares and potential market definition issues:
Defining the market could be tricky. According to Merrill Lynch analysts, Coca-Cola will control 37% of the Chinese juice market with its brands if it succeeds in the acquisition. Coke holds 28% of the overall juice market, but focuses on the lower end with its Minute Maid brand. Huiyuan competes mostly in the high-end juice market, holding a more than 40% market share.
It will be interesting to watch what standards are applied to the merger analysis and what role various non-economic considerations, which have been much discussed in the context of the Chinese AML, will play in practice. But lets not move to quickly to the substantive issues. Perhaps a much larger problem is who is going to actually carry out the analysis. Here’s a troubling line from the WSJ story: “The Ministry of Commerce, which oversees the application of the antimonopoly law, will define the market. Mr. Liu said the ministry’s antitrust office hasn’t been staffed yet.”
On related matters, Steve Dickinson of the China Law Blog has a nice post covering the national security review aspects of application of China’s AML.
In addition, the August 2008 issue of Global Competition Policy magazine includes a symposium on “Assessing China’s Antimonopoly Law.”