Wahaha JV shareholders file lawsuit against Danone

17th December 2007, Comments 0 comments

Shareholders in two joint ventures between China's Wahaha and Danone are suing the French food company for 10 million yuan (1.3 million dollars)

   BEIJING, December 16, 2007  - Shareholders in two joint ventures between
China's Wahaha and Danone are suing the French food company for 10 million
yuan (1.3 million dollars) for violating their rights, a lawyer said Sunday.
   The lawsuit filed in eastern China's Weifang city is the latest action in
an extensive and bitter ownership feud over the Wahaha brand name between
companies that were once partners in a model of Sino-foreign cooperation.
   "Danone has been buying the shares of other companies that compete with
Wahaha, this is in violation of its shareholder agreements with Wahaha," Qian
Weiqing, lawyer for the shareholders, told journalists.
   Qian said that Danone had bought between 20 percent and 90 percent of seven
Chinese name brand food and beverage companies that are directly in
competition with Wahaha.
   Danone officials were also serving on the board of directors of both the
Danone-Wahaha joint ventures as well as the boards of the other companies that
compete against Wahaha -- a conflict of interest, he said.
   Danone, which holds 51 percent of 39 joint venture companies with Wahaha,
filed a lawsuit on June 4 for breach of agreement, accusing the Chinese
beverage giant of selling Wahaha-branded beverages without its permission.
   It has brought the case to an arbitration commission in Sweden and filed a
lawsuit in the United States alleging Wahaha had set up 20 independent
competing companies that sold the same products as the Danone-Wahaha venture.
   Lawyer Qian said he was seeking the 10 million yuan in compensation for
shareholders in two Danone-Wahaha joint ventures, the Weifang Wahaha Beverage
Company and the Weifang Wahaha Foodstuff Company.
   Last week, an arbitration commission in Hangzhou city where Wahaha is
headquartered voided the trademark transfer agreement between the two
companies that dated back to 1996, in a major loss to Danone.
   Danone immediately said it would appeal the Hangzhou court decision that
hands the Wahaha brand back to the Chinese joint venture partner, citing
errors in fact and protectionism.

(AFP)

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