The U.S. Department of Justice (DOJ) has filed a civil antitrust lawsuit to block Anheuser-Busch InBev's $20.1 billion deal to acquire total ownership of Grupo Modelo.

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DOJ files suit against merger of brewers

January 31st, 2013

WASHINGTON – The U.S. Department of Justice (DOJ) has filed a civil antitrust lawsuit to block Anheuser-Busch InBev's $20.1 billion deal to acquire total ownership of Grupo Modelo.

The DOJ said Thursday that the acquisition would "substantially lessen" competition in the U.S. beer market overall and in 26 metropolitan areas across the country, resulting in consumers paying more for beer and having fewer new products from which to choose.

The suit, filed in the U.S. District Court for the District of Columbia, aims to prevent the transaction and maintain the current "head-to-head" competition between the two brewers, according to the DOJ.

"The department is taking this action to stop a merger between major beer brewers because it would result in less competition and higher beer prices for American consumers," Bill Baer, assistant attorney general in charge of the DOJ's antitrust division, said in a statement. "If ABI fully owned and controlled Modelo, ABI would be able to increase beer prices to American consumers. This lawsuit seeks to prevent ABI from eliminating Modelo as an important competitive force in the beer industry."

Anheuser-Busch InBev called the DOJ's suit "inconsistent with the law, the facts and the reality of the marketplace."

"On 29 June 2012, the companies announced an agreement under which AB InBev will acquire the remaining stake in Grupo Modelo that it does not already own," AB InBev said in a statement Thursday. "We remain confident in our position, and we intend to vigorously contest the DOJ's action in federal court. Given today's development, we no longer expect the deal to close during the first quarter of 2013. We will comment further once we have reviewed the DOJ filing."

According to the DOJ, Belgium-based AB InBev and Mexico-based Modelo — the largest and third-largest beer makers, respectively — together represent about 46% of annual beer sales in the United States. MillerCoors, the second-largest beer firm, accounts for about 29% of national sales.

The department claims that AB InBev's acquisition of total ownership of Modelo would end competition between ABI and Modelo, further consolidate the beer industry, enhance AB InBev's market power and facilitate coordinated pricing between ABInBev and other larger brewers — with consumers seeing higher prices and less innovation. The suit also alleges that AB InBev and Modelo's efforts to remedy the anticompetitive aspects of their transaction are inadequate.

Americans spent at least $80 billion on beer last year, with AB InBev's Bud Light the best-selling beer in the United States and Modelo's Corona Extra the best-selling import, the DOJ reported.

AB InBev's product portfolio has over 200 beer brands, including Budweiser, Bud Light, Stella Artois, Beck's, Busch, Michelob, Michelob Ultra and Hoegaarden, among others. Grupo Modelo brews and distributes 13 brands, including Corona, Modelo Especial, Victoria, Pacifico and Negra Modelo.

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