By Diao Ying (China Daily)
Updated: 2007-12-17 14:47

The trade union of Wahaha, Danone's partner in China, joined the dispute between the two companies yesterday by filing a lawsuit against the French food group, resulting in the freezing of some of its assets in the country.

The trade union, representing about 10,000 workers of the Hangzhou Wahaha Group, has already sued two of Danone's sister companies in Shandong Province earlier this month.

A court has frozen Danone's assets in its joint ventures in Hangzhou, the trade union's lawyer Qian Weiqing said.

This is the latest episode in the battle between Danone and Wahaha since a dispute broke out earlier this year. In April, Danone accused Wahaha of running parallel operations to make and sell products that were part of the joint ventures. In turn, Wahaha accused Danone of violating non-competition agreements.

The trade union said yesterday that Danone had damaged the joint ventures' and shareholders' interests by holding stakes and chairing positions in the ventures' direct competitors. It asked Danone to "stop violating rights" and demanded the French company pay a 10-million-yuan ($1.36 million) damage.

The case involving the biggest French beverage company and one of China's most famous brands was raised even during French President Nicolas Sarkozy's state visit to China.

Danone has 51 percent stake in 39 joint ventures with Wahaha, and the trade union holds 40 percent shares of Guangsheng Investment Co, which holds the rest of the ventures.

The union plans to replicate its legal action in Shandong in the rest of 37 joint ventures if Danone doesn't "correct its mistake". The assets of the 39 ventures were worth 7.9 billion yuan ($1.07 billion) last year, Qian said.

The French company has said that 5-6 percent of its total global profit comes from its joint ventures with Wahaha.

Danone could not be reached for its reaction to the lawsuit yesterday. But the French company is reportedly taking legal action and seeking arbitration overseas in places such as Stockholm.