French food and beverage giant Danone said it has filed a lawsuit in California against its joint-venture partner Wahaha, China's largest beverage company, for alleged breach of contract.
Danone, maker of Evian mineral water and yoghurts, owns 51 per cent of a joint-venture with Wahaha that is based in the eastern Chinese city of Hangzhou.
It accuses Wahaha of violating a 1996 contract by using the Wahaha brand name on products sold outside the joint venture.
"Hangzhou Wahaha Food and Beverage Sales is illegally selling products which are the same as those sold by Wahaha Joint Ventures and is making unlawful use of the Joint Venture's distributors and suppliers," Danone said in a statement last night.
China represents about 10 per cent of Danone's sales.
In April, Danone was still aiming to solve the issue through negotiations but threatened to take legal action.
Wahaha officials declined to comment by telephone, and an emailed response from spokesman Shan Qining did not address the question of whether the 1996 agreement had been breached.