Another hotspot related to this case is national security issue.
The opponents argued that this concentration will threat the national security of our country. Huiyuan is a well-known domestic brand in Chinese juice beverage market. According to a survey made by AC Nielson, pre-concentration, Huiyuan’s market share in pure juice beverage market and middle-level concentration juice beverage market reached 42.10% and 43.60% respectively. If Huiyuan was acquired by Coca-cola, a foreign giant in soft drink market, this domestic brand will suffer the same fate as those who have been acquired by foreign corporations: disappear in the market. At that time, Chinese juice beverage market will be monopolized by foreign enterprise. It will be a huge threat to China’s economic and food security.
From my perspective, this argument is not so persuasive.
National security issue is too broad and general to be defined: no detailed instructions as to what national security issue is. It is true that we should keep alert to those areas which were crucial to the well-being of the nation, such as oil industry and telecommunication industry. On the other hand, we should not overreact to the reasonable concentration in other areas, such as concentration in the juice beverage market. What is more, when the definition is too obscure, this issue can be so easily employed by the competitors to delay or block the transaction. This delay or block may harm the competition in the market.
Secondly, which institution has authority to launch investigation as to this national security issue? The investigation requires professional knowledge and judgments and few institution can be qualified as to this difficult task at this point.
The last point I should underscore here is the positive influence Coca-cola & Huiyuan concentration case brought to Chinese anti-monopoly legislation and practice.
As I have mentioned above, this case incurred a lot of criticisms and debates and all these make three law-enforcement institutions (SAIC, MOFCOM and NDRC) be aware of the importance of the promulgation of detailed instructions. In responding to this, they have drafted series of guidelines and just this Monday, SAIC promulgated two new drafted regulations: Regulation to prohibit monopoly agreement and Regulations to prohibit abuse of dominant market position. All these drafts dramatically improve the practice of AML in china, and some of which can be interpreted as substantial modification to the statutes
I will cite an example of these modifications here: what is worldwide and nationwide turnover.
Provisions of the State Council on Thresholds for Prior Notification of Concentrations of Undertakings Article 3 stipulates, when undertakings’ worldwide turnover and nationwide turnover reach to certain thresholds, they shall file a prior notification. The provision does not specify whose turnover should be included in this turnover. Then, theoretically speaking, if an enterprise attempts to circumvention this notification, he could establish a new subsidiary in China, and this new subsidiary will not meet the threshold of the turnover. It conflicts with the aim of AML.
In order to remedy this flaw, MOFCOM draft Temporary Guideline on Reporting of Concentration of Business Operators (Draft,) which stipulates that worldwide and nationwide turnover include all undertakings’ subsidiaries’ and/or parent corporations’ turnover.
This clarification makes the AML more likely to fulfill its aim and become more reasonable.