Chinese firm files complaints with Chinese government over McDonald's China sale

Thu Feb 16, 2017 6:01am EST
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By Michelle Price and Julie Zhu

HONG KONG (Reuters) - A Chinese consultancy that has previously helped to win antitrust battles against Coca-Cola and Apple has taken aim at McDonald's Corp, arguing in a complaint to regulators that the American fast food giant's China sale may hurt workers and consumers.

McDonald's said last month it had agreed to sell the bulk of its China and Hong Kong business to state-backed conglomerate CITIC Ltd and U.S. private equity firm Carlyle Group LP for up to $2.1 billion, in a deal that will see the consortium act as the master franchisee for a 20-year period.

The complaint, which follows allegations from a U.S. labour union that the transaction will likely lead to poorer pay and conditions for McDonald's 120,000 workers in China, could delay regulatory approval for the deal.

Beijing-based Hejun Vanguard Group, a Chinese management consultancy that has a track-record of representing domestic companies against foreign firms, filed two separate complaints against McDonald's with the Ministry of Commerce's (MOFCOM) antimonopoly bureau and its franchise office, Hejun Vanguard told Reuters.

While Hejun has stopped short of asking MOFCOM to block the deal, it has called on the regulator to closely scrutinize the transaction and take measures to prevent McDonald’s “abusing” what it claims is the company’s dominant position in the fast-food burger market in China.

It has also called for MOFCOM to investigate alleged violations of China’s franchise law by McDonald’s, which it claims has failed to properly register all of its outlets in mainland China.

MOFCOM had yet to respond to a request for comment at the time of publication. CITIC, CITIC Capital and Carlyle declined to comment.

McDonald's said it had filed its franchise business with MOFCOM in accordance with franchise regulations, and disputes Hejun's analysis of its market share in China. It added that its franchise model globally is based on mutually beneficial partnerships.   Continued...

Customers eat dinner at a McDonald's store in Beijing, China January 9, 2017. REUTERS/Jason Lee/File Photo