Coca-Cola’s Proposed Acquisition of Huiyuan: Revisiting the MOFCOM Decision

HUANG Kun1 and ZHANG Xinzhu2,3

1. Graduate School of the Chinese Academy of Social Sciences (CASS)

2. Special-Term Professor of Jiangxi University of Finance and Economics

3. Director and Professor of Center for Regulation and Competition, CASS

Abstract:

This paper revisits the Coca-Cola/Huiyuan case, using quantitative methods. We first estimate the demand system of carbonated soft drinks and juices, using the data of the 4-digit code Chinese soft drink industry. We then define the relevant market by implementing the SSNIP test (a.k.a. the hypothetical monopolist test). Finally, we evaluate the unilateral effect on the juices market with merger simulation. Our results show that carbonated soft drinks and juicess are in two separate relevant markets. More importantly, there may be a significant unilateral effect on the juices market based on scenario analysis. This result confirms the MOFCOM decision itself, but highlights that competition damage comes more from unilateral effect than from the dubious portfolio effect.

Key words:

antitrust, relevant market definition, unilateral effect, merger simulation

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