Negotiations During Coca-Cola Deal Review Confidential

BEIJING -(Dow Jones)- China's Ministry of Commerce said Tuesday confidentiality rules prevented it from disclosing details about the solution it had sought to ease competition concerns while it was reviewing Coca-Cola Co.'s ( KO) proposed acquisition of China Huiyuan Juice Group Ltd. (1886.HK).

The ministry last week rejected Coca-Cola's $2.4 billion bid to acquire one of China's largest juice makers, saying the deal - which would have been the largest-ever foreign takeover of a Chinese company - would unduly restrict competition.

The ministry said earlier the decision was made after it had attempted to negotiate with Coca-Cola for a more limited deal that would mitigate what it considered the anti-competitive effects of the acquisition.

In a statement on its Web site, the ministry said it couldn't disclose detailed information about the negotiations due to confidentiality clauses in the anti-monopoly law.

The statement came after some observers cast doubt over the decision, which they said wasn't strong enough to justify the competition concerns. Some critics said the rejection could arouse trade protectionism concerns and hurt foreign investment in China.

The ministry reiterated its concerns that Coca-Cola could use its dominance in China's carbonated drinks market, where it has a 60.60% share, to gain advantage at the local juice drinks market.

The ministry said Coca-Cola could use methods such as bundling different types of drinks for sales together, or attaching exclusionary sales conditions, to " seriously harm or even deprive of" the competitiveness of other juice drinks makers on the market.

The ministry didn't give an estimate about what market share Coca-Cola could gain of China's juice drinks market through the acquisition.

Huiyuan is China's largest juice maker. Its share of China's pure-juice sector, in terms of sales value, was 32.6% of that market by the end of the year, according to market research firm Euromonitor, a lower share compared with 44% at the end of June.

The ministry also said its decision was objective and unaffected by nationalist tendencies, unlike what some foreign media have said.

-Victoria Ruan contributed to this story, Dow Jones Newswires; 8610 6588-5848; victoria.ruan@dowjones.com