CHINA HAS rejected Coca-Cola’s planned $2.4 billion (€1.78 billion) acquisition of top juice maker Huiyuan Juice, saying the deal would have been bad for competition.

The acquisition by Coca-Cola would have been the largest buyout of a Chinese company by a foreign rival on record.

The rejection of the bid is sure to be seen as another sign of the protectionism that has been mounting globally as much of the world is gripped by recession.

Observers said China’s ruling on Coca-Cola could cut both ways in that Chinese companies that have been making increasingly high-profile acquisitions abroad may run into trouble of their own.

Australia’s foreign investment review board is considering three big investments by Chinese state-run companies in its mining sector. In particular, political opposition to Rio Tinto’s planned $19.5 billion tie-up with Chinese state-owned Chinalco has been intensifying, and yesterday the Australian senate said it would launch its own inquiry into foreign investment.

China’s ministry of commerce rejected the Coca-Cola transaction under an anti-monopoly law enacted last year, saying in a statement that Coca-Cola’s changes to the deal were insufficient to allay its concerns.

Coca-Cola, the world’s largest soft-drink maker, said it held a long-term view of the Chinese market and would now focus on increasing sales of existing brands and innovating with new ones.

“We are disappointed, but we also respect the MOC’s [Chinese ministry of commerce’s] decision,” said Coca-Cola chief executive Muhtar Kent in a statement.

An official with Huiyuan could not be reached. – (Reuters)