A complaint has been filed against McDonald’s by a Chinese consultancy that has previously helped to win antitrust battles against Coca Cola and Apple. The complaint to regulators argued that McDonald’s China sale may hurt workers as well as consumers.
McDonald’s announced last month that it has 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 for up to $2.1 billion. The deal will see the consortium act as a master franchisee for a 20-year period.
Beijing-based Hejun Vanguard Group, a Chinese management consultancy, has a track record of representing domestic companies against foreign firms. Hejun has filed two separate complaints against McDonald’s with the Ministry of Commerce antimonopoly bureau and its franchise office.
Hejun is calling on the regulator to closely scrutinize the transaction and take measures to prevent McDonald’s from “abusing” what it claims is the company’s dominate position in the fast-food burger market in China. Hejun analysis shows McDonald’s has 53 percent of the fast-food hamburger market in China. Hejun has also called for the investigation of alleged violations of China’s franchise law by McDonald’s, claiming that McDonald’s has failed to properly register of of its outlets in Mainland China.
The compliant, which follows allegations from a U.S. labor 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 McDonald’s China deal.
The Service Employees International Union, a U.S. labor organization, said previous such transactions in markets such as Brazil and Puetro Rico put enormous pressure on francisees, making it harder for them to provide adequate pay and conditions for their workers.
