Danone files claim against Wahaha

PUBLISHED : Friday, 13 July, 2007, 12:00am
UPDATED : Friday, 13 July, 2007, 12:00am

The dispute between Groupe Danone and Wahaha Group has intensified, with the French food and drink firm saying it has filed a counter-claim with the Hangzhou Arbitration Commission seeking to retain control of the Wahaha brand.

Danone also accused Wahaha founder and chairman Zong Qinghou of lying when he said the State Trademark Office had rejected a transfer of the brand to the venture.

'The Wahaha joint venture company has filed a statement of counterclaim with the Hangzhou Arbitration Commission, requesting that the tribunal render an award to the effect that Wahaha Group should perform the Trademark Transfer Agreement dated February 29, 1996, immediately,' Danone said in a statement.

Danone and Wahaha, the mainland's largest drink maker, formed a joint venture in 1996. The French company owns a 51 per cent stake in the venture and signed an agreement under which Wahaha was to transfer its brand to the venture.

However, Mr Zong claimed the agreement was invalid as the government had rejected the application in a bid to protect the homegrown brand.

'That explanation is novel, but not true,' said Tao Wuping, a Shenda Partners lawyer representing Danone. 'We don't see any clear-cut wording giving approval or rejection by the authorities in this case. We don't believe the transfer was ever proceeded lawfully.'

Wahaha last month filed for arbitration at home in Hangzhou, Zhejiang province, claiming the joint venture never had the legal right to use the Wahaha name.

That came after Danone accused Wahaha of illegally selling products in conflict with the non-competition obligation in the agreement.

The French company filed a lawsuit in California, accusing Wahaha of using the brand on products sold outside the joint venture. It also filed for arbitration in Stockholm to help resolve the dispute.

Mr Zong, a member of the Communist Party, resigned as chairman of the joint venture in June following Danone's lawsuit.

He said the dispute between the two companies was a result of a cultural divide. He said Danone had never helped Wahaha to grow and said it lost money when Danone took control of its largest domestic rival Robust Group.

On Tuesday, Wahaha's Shenyang unit filed a lawsuit with a mainland court accusing Qin Peng, a mainland director for Danone, of illegally serving on the boards of rival firms.