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Danone Takes Firms to Court in US
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French food and beverage major Groupe Danone SA yesterday said it has filed a lawsuit in the United States against two companies involved in its dispute with its joint ventures partner Wahaha, China's largest beverage company.

Accusing its Chinese partner of illegally using the Wahaha brand without consent, Danone took Ever Maple Trading Ltd and Hangzhou Hongsheng Beverage Ltd, and two people connected with the companies, to the Superior Court of California's County of Los Angeles on Monday, Danone said in a statement yesterday.

Hangzhou Wahaha Food & Beverage Sales Ltd, accused by Danone of selling products competing with those produced by the joint ventures, is a wholly owned subsidiary of Hangzhou Hongsheng, which is controlled by the British Virgin Islands-registered Ever Maple, according to the statement.

The lawsuit came after Danone took the matter to an international arbitration body and as its negotiations with Wahaha seem to be going nowhere.

"Hangzhou Wahaha Food and Beverage Sales is illegally selling products which are the same as those sold by Wahaha joint ventures and is making unlawful use of the joint ventures' distributors and suppliers," Danone said in the statement.

The lawsuit is aimed at curbing the collective conspiracy of the defendants, who might adopt devious measures to damage the joint ventures' relations with customers and their business prospects, the world's largest yogurt maker said.

Danone and Wahaha set up the first group of five joint ventures in 1996 under an agreement that bans the Chinese partner from selling products that compete with those made by the ventures or using the well-known Wahaha brand without Danone's nod.

But the Paris-based company recently claimed it had found that Zong Qinghou, founder of Wahaha, had set up companies outside the joint ventures to produce competing products.

Ever Maple, launched in January 2003 with Zong's daughter as legal person, is one of a handful of offshore companies that invested in the non-joint ventures.

Hangzhou Hongsheng was founded in October 2003 with 1.5 million yuan and 50 employees. Zong's daughter held the position as legal person in this organization as well.

Zong had caused a flutter in business circles by accusing his French partner of trying to acquire its assets beyond joint ventures for 4 billion yuan and called for protection of the domestic brand.

Danone had threatened to adopt legal proceedings against its Chinese partner. The company and its subsidiaries have also proposed eight arbitration applications to the Arbitration Institute of the Stockholm Chamber of Commerce.

(China Daily June 6, 2007)

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