Prevent the formation of monopolies

PUBLISHED : Wednesday, 17 June, 2009, 12:00am
UPDATED : Wednesday, 17 June, 2009, 12:00am

The central government recently blocked an acquisition by Coca-Cola of the mainland's leading juice maker Huiyuan in order to prevent the formation of a monopoly.

To my mind, the government made the right decision. Although the more than 20 per cent domination of the market that would have resulted from the merger is not exactly a monopoly, it would have been a huge share of a very huge market.

The merger of the two drinks manufacturing giants could have created a negative effect on competition and forced consumers to pay higher prices.

Competition not only keeps prices down; it forces manufacturers to improve their products, which is good for everybody. Any kind of monopoly affects prices and the quality of products.

I am relieved to see that the government put its foot down and prevented that from happening.

Michael Hung Sze-chung, POCA Wong Siu Ching Secondary School

From the Editor

Thanks for your letter, Michael. People used to think monopolies were the ultimate example of a successful free market system - and that that was a good thing. They believed the efficient production of goods and increases in profit were the two most important things management should worry about. This thinking has resulted in some big mistakes being made.

But the tide is turning as people become aware of the consequences of these actions in terms of health, consumer rights and workers' rights.

Now consumers are choosing not to support monopolies and to give their money to smaller companies that are producing goods in a more socially responsible way.

The problem is that only wealthy people can afford to do this, while developing nations are more concerned with feeding their people than where the food comes from, or how it got there.

Susan, Editor