On Jan. 31, the U.S. Department of Justice (DOJ), Washington, D.C., filed a civil antitrust lawsuit challenging Leuven, Belgium-based Anheuser-Busch InBev’s (AB InBev) proposed acquisition of total ownership and control of Grupo Modelo, Mexico City. On June 29, 2012, AB InBev announced an agreement under which it would acquire the remaining stake in Grupo Modelo for $20.1 billion. Tangentially, Constellation Brands Inc., Victor, N.Y., which in a joint venture with Grupo Modelo currently owns 50 percent of Crown Imports LLC, Chicago, signed an agreement with AB InBev to purchase the remaining 50 percent interest in Crown for $1.85 billion.
The department said that the transaction would substantially lessen competition in the market for beer in the United States as a whole and in 26 metropolitan areas across the United States, resulting in consumers paying more for beer and having fewer new products from which to choose.
The department’s complaint also alleges that AB InBev and Grupo Modelo efforts to remedy the anticompetitive aspects of their transaction are inadequate. The complaint states that AB InBev has agreed to sell Grupo Modelo’s existing 50 percent interest in Crown Imports to its joint venture partner, Constellation Brands. AB InBev also would enter into an exclusive agreement to supply Constellation Brands with Grupo Modelo beer to import into the United States, although AB InBev can terminate this supply agreement after 10 years and would retain the Grupo Modelo brands and its brewing and bottling facilities.
AB InBev responded to the lawsuit, saying: “The U.S. Department of Justice’s action seeking to block the proposed combination between AB InBev and Grupo Modelo is inconsistent with the law, the facts and the reality of the marketplace. On [June 29], the companies announced an agreement under which AB InBev will acquire the remaining stake in Grupo Modelo that it does not already own. 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.”
Constellation Brands also responded with the following statement: “Constellation Brands is disappointed with the DOJ decision. The proposed transaction would further establish Crown Imports as a more independent and competitive entity and solidify its position as a major player in the U.S. beer industry. We will provide further comment when appropriate. Given today’s development, we no longer expect the deal to close during the first calendar quarter of 2013, but we ultimately look forward to an expeditious resolution.”
The department’s lawsuit, filed in the U.S. District Court for the District of Columbia, seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate, it states.
