Re-evaluate "coca Cola/huiyuan Merger"

The China Antitrust Act goes to effect on August 1st 2008, and only 1 month later it faces its first challenge, the attempt merger on Huiyuan Juice Co. by Coca-Cola, which is also the biggest merger ever made by foreign corporation since Reform and Opening-up Policy of China built up. On March 18th 2009, the Commerce Department of China determines that the merger has already violent the 28th and 29th regulation of the Antitrust Act which means the combination could potentially harm the competition, such as monopolies and cartels. The Commerce Department hereby stopped the transaction since the Coca-Cola failed to present a revision which can reduce the harm to competition.The Coca-Cola/Huiyuan Juice Merger is not only the biggest transaction that ever made but also the first case that met the Antitrust Act. It provided valuable information for our research and it is a typical case of anti-monopoly as well. As shown the value of this case above, this paper will try to do the research on this merger by using a new empirical economic method--PCAIDS model.As the first case in the China Anti-Trust history, The Coca-Cola/ Huiyuan Juice merger was selected as the merger simulation model in this paper, but the accusation of the data regarding the whole juice market and relevant corporations is open to question due to incomplete and security reason which is also a pity of the paper. Further more, the PCAIDS is doing the analysis based on different brand, but the market share of different brands is hard to get, and it is not easy to define the relevant market in the case either. The paper made a reasonable hypothesis and approximation during the simulation and at last drew the conclusion that the unilateral effects will be raised and the price will be raised about 24%. The paper supports the judgment made by China Commerce Department in March 18th 2009 which avoids a potential monopoly in the juice market if the merger succeeded.The hypothesis and approximation during the simulation will not effect the conclusion. The veto from The Commerce Department is concerning a pre-merged out-come. The paper uses a merger simulation model that estimates the post-merger out-come based on the pre-merger situation. Generally, merger simulation models use standard oligopoly models calibrated to observed prices and quantities to predict the effects of a merger on the prices and quantities of the merging firms and their rivals. This type of computational simulation of mergers is becoming more and more widespread among both authorities and private consultancies, mostly as a consequence of developments in both theoretical industrial organization and in computational technologies and empirical methods. The paper also discusses the consequence will have on the competition of the market by rejecting the combination while supporting it.PCAIDS merger simulation model is grounded in the theory of industrial organization to predict the effect of mergers on the price in the relevant markets. The predicting accuracy of this method will depend on data availability and on the mathematical characterization of the market or market at issue. While merger simulation is not a panacea for all of the economic issues in a transaction, it nonetheless can offer assessments of competitive effects and remedies that are beyond the reach of other methods. For example, simulation has been used to evaluate the likelihood that potential merger-specific efficiencies (associated with reductions in the marginal cost of production) are sufficiently great to offset predicted price increases. Simulation can also be used to analyze the competitive effects of product repositioning and de novo entry. Finally, simulation can evaluate the adequacy of proposed divestitures. With time, simulation techniques will be better understand and more widely used by antitrust authorities and economists.