Takeover veto preserves symbol of French taste

THE SYMBOLISM of the deal was always awkward for a left-of-centre French government, sworn to resist the excesses of international capitalism.

After a year of negotiations, Paris has decided to reject a pounds 500m bid by Coca-Cola for Orangina, an audacious attempt by the soft drink that characterises America to take over the soft drink symbolising France.

The rejection is bound to be seen as another example of French protectionism and, in some ways, it suits the pink-red-green coalition running France to have it portrayed that way. In reality, the Jospin government had long leaned to accepting the takeover, which had many potential advantages. The bid price gave Orangina's owner, Pernod-Ricard, twice the market worth of its subsidiary. Orangina's employees were satisfied with the guarantees given by Coca-Cola to make the yellow drink in the squat bottle a global brand name.

It was Pepsi-Cola, Coke's great rival, which fought hardest to put the cap back on the deal. Pepsi has an exclusive contract to market Orangina to French cinemas, sports stadiums and service stations, the most profitable part of the soft drinks market. Pepsi said a Coca-Cola takeover would give its rival an unfairly dominant position in the market.

This argument was accepted by the French competition council, the equivalent of Britain's Office of Fair Trading. French economics ministry officials say their arguments are similar to those employed by the US government in its attempt to reduce the dominant position of Microsoft in the American software market.