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Wahaha, Danone legal battle hots up

China's biggest drinks company Wahaha (娃哈哈) said yesterday it would begin legal action against French food giant Danone, the latest twist in a bitter feud between the joint venture partners.

"Wahaha has decided to apply for arbitration in Hangzhou in the dispute over the trademark transfer agreement," Wahaha spokesman Shan Qining (單啟寧) said.

Hangzhou, the capital of Zhejiang Province, is Wahaha's home city and its decision to take action there came after Danone began its own legal proceedings last week in the US.

Wahaha claims that Danone "trapped" it into signing the joint venture agreement with restrictions on the use of the brand.

Speaking at a press conference in Hangzhou on Wednesday, Wahaha chairman Zong Qinghou (宗慶後) said the agreement was never approved by China's trademark authority, according to a report by Xinhua news agency.

The French company, the producers of Evian water, joined forces with Wahaha in the 1990s in a quest to dominate the Chinese market but the partnership has disintegrated in spectacular fashion in recent weeks.

Danone has alleged that up to 20 rogue companies secretly set up by Zong, some of them run by family members, were illegally producing identical Wahaha products and selling them on the Chinese market.

Danone filed legal action against Wahaha, Zong and his relatives in the US on Monday last week.

Zong resigned from the joint ventures the following day, later accusing the French group of "slander and tyranny."

The new interim chairman of the joint ventures, Danone executive Emmanuel Faber, said on Tuesday he would prefer an "amicable" settlement but that the French company was committed to the legal battle.

Zong took a swipe at Faber during Wednesday's press conference, saying he would do a good job in his new post but that "a title doesn't necessarily bestow authority and public trust. Faber must be accepted by the employees."

Employees at three joint venture plants have signed a petition supporting their former president and were in a hostile mood, previous state-run reports said.

The fight first came to light in April when Zong published a statement accusing Danone of embarking on a series of hostile takeovers that would result in the loss of Wahaha's control of its own brand.
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