Wahaha ups ante with plans for Euro5b lawsuit

PUBLISHED : Tuesday, 26 June, 2007, 12:00am
UPDATED : Tuesday, 26 June, 2007, 12:00am

As row with Danone escalates, drinks maker cites 'illegalities'

Hangzhou Wahaha Group, the mainland's largest drinks maker, stepped up a battle with joint venture partner Groupe Danone, saying it plans to sue the French food giant for up to Euro5 billion (HK$52.56 billion) for 'illegal activities'.

The companies are sparring over the use of the Wahaha brand as their decade-old beverage venture, of which Danone owns 51 per cent, crumbles. Danone, which produces Evian drinking water, accuses Wahaha of setting up independent companies to sell products identical to those sold by the joint ventures.

It is demanding a 51 per cent share of the non-joint venture businesses that are using the brand Wahaha, a Chinese word that mimics the sound of a laughing child.

Wahaha, which has produced a steady stream of public statements against Danone, since the disagreement became public this month, did not specify when and where the case would be filed.

According to Wahaha, the mainland company and its non-joint venture businesses can use the Wahaha brand freely, except when the joint-venture board disagrees or when using the name will hurt the brand value.

'We never received any notices from the joint-venture board that they didn't allow the use of the Wahaha brand by non-joint venture businesses,' Wahaha said at the weekend.

Danone has already filed cases against Wahaha in the Los Angeles and Stockholm and Wahaha said it would respond to them.

'We will sue Danone in reverse, asking for compensation of Euro2 billion, Euro3 billion or Euro5 billion,' Wahaha said. 'We already have authentic evidence of Danone's illegal activities and will pursue the other illegal activities according to the law.'

Wahaha said Danone had 'ignored' mainland regulations which left several flaws in the contracts the two parties signed.

Wahaha spokespeople were not available to comment and Danone declined to respond to the statement. Wahaha has already received approval for a review from an arbitration committee in Hangzhou, where it is based.

Wahaha founder Zong Qinghou earlier this month resigned as head of the venture and Danone has tapped the joint venture vice-chairman, Frenchman Emmanuel Faber, to lead the 39 partnerships under the venture, a move Wahaha is resisting.

Hangzhou says the appointment of the new chairman is illegal

Businesses worldwide are watching the saga amid a rise in economic nationalism on the mainland.