Sunday, September 14, 2008
Posted by D. Daniel Sokol
The Wall Street Journal reports that the Chinese Antimonopoly Commission of the State Council is now in operation. Coke's potential acquisition of China Huiyuan Juice Group is an issue. According to the article:
On the domestic front, the commission will "ensure the control of state enterprises in important industries and key sectors" while also "preventing companies from abusing a position of market dominance to violate the rights and interests of other operators and the majority of consumers," the Xinhua report said. The meeting also agreed that enforcement of the law will provide "equal protection for all the legitimate rights and interests of foreign investors" but also "prevent malicious foreign takeovers and protect national economic security."
I am hoping that "malicious foreign takeovers" does not mean takeovers that have no competitive impact other than a bruise to the national ego. If the United States can allow the sale of Anheuser-Busch to a Brazilian-Belgian concern without resorting to spurious antitrust claims (after previous sales of Coors to Canadians and Miller to South Africans which means that no major American brewery is in US hands... and what is more American than beer?), other countries should be equally willing to understand that foreign ownership from an antitrust perspective is not a problem in and of itself. What should drive the antitrust inquiry is not xenophobia but whether the proposed transaction substantially lessens competition and as a consequence the merger does not encourage the price-reducing and quality-enhancing effects of competition.