On Mar. 18, Beijing rejected Coca-Cola's proposed acquisition of China's leading fruit juice company. The Ministry of Commerce, applying the country's new anti-monopoly law, said the proposed $2.4 billion merger with Huiyuan Juice Group might end up increasing prices and squeezing out smaller producers. The action has been hailed a "landmark," and the label is apt. The Coke decision, after all, was the first use of the law, effective last August, to block an acquisition.
Did the Chinese government do the right thing? JP Morgan's Selina Sia, one of the few analysts who predicted the deal would fail, thought that Beijing's concerns were justifiable. Even a Pepsi (nyse: PEP - news - people ) deal might have been approved, she told Hong Kong's South China Morning Post. In her view, a combination of the American giant with the Chinese one would have made it impossible for others to compete in sourcing ingredients, branding products and distributing them.
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