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Anheuser-Busch CEO Defends SABMiller Deal in Congress

WASHINGTON (CN) - While representatives of craft brewers and wholesalers fretted about a merger between two of the largest beer distributers in the world, the CEO of Anheuser-Busch's parent company told senators on Tuesday the merger would have no impact on production in the United States.

"This transaction has nothing to do with the U.S.," Carlos Brito, CEO of Anheuser-Busch InBev told the Senate Committee on Antitrust, Competition Policy and Consumer Rights. "And it therefore will have no impact in our operations in the U.S. market. That I can guarantee you."

Brito repeatedly promised Anheuser-Busch InBev's acquisition of SABMiller, an international company that brews Perioni, Miller and Milwaukee's Best as well as other brands, would not increase production and therefore would not impact the markets for hops, barley or aluminum cans.

Anheuser-Busch InBev announced in November it would purchase SABMiller for $106 billion, bringing together the two largest beer producers in the world.

As part of the deal, the companies announced SABMiller would divest its interests in Miller Coors, which Molson Coors would buy up to become the sole shareholder, according to Mark Hunter, CEO of Molson Coors.

But some of the senators on the committee, as well as representatives of craft brewers, wholesalers and the American Antitrust Institute, questioned whether Brito's promise was accurate and how the acquisition would impact distributers and the ability of small craft breweries to get their beers on store shelves.

"If the American beer drinker is left to be the deciding force and their access to products from small, independent breweries is not impacted at all, then we are going to be comfortable," Bob Pease, CEO of the Brewers Association, said. "But we have significant concerns about how this deal could impact both access to market for small craft brewers and access to opportunities."

Even with the divestiture of Miller Coors, the greater control over the beer market would give Anheuser-Busch InBev incentive to exercise more control over the beer market by tightening smaller brewers' access to distributers, Diana Moss of the American Antitrust Institute said.

Moss called for a ban on contract brewing between Miller Coors and the new Anheuser-Busch InBev, as well as the closing of any production plants for the company and other solutions that would keep the companies independent.

Pease called for SAB Miller to also shed its ownership of beer distributors in the country as part of the merger.

"If you want to grow your business as a craft brewer, if you want to get your beer into a chain store, if you want to get your beer into the stadium, you need to use the Anheuser-Busch distributor [or] the Miller Coors distributor," he said. "Those are the only two options in most markets that have the horsepower to effectively bring your beer to the retail market."

If Anheuser-Busch InBev distributors are the only option in the area, craft brewers are effectively shut out of the major markets because of variations in local regulations, Pease said.

To illustrate the problem small craft breweries could face in getting their beers to market, National Beer Wholesalers Association CEO Craig Purser compared the beer and soft drink aisles found in most grocery stores.

While beer aisles usually contain large, diverse selections, soft drink aisles typically provide shoppers the choice between just two brands. Purser warned that Anheuser-Busch InBev's purchase of SAB Miller combined with its continued efforts to buy up interdependent distributors could clamp down on this selection and make the beer aisle look like the soft drink aisle.

The members of the committee and the representatives of the craft brewers sought to find a way to avoid this outcome, which they said could kill what Hunter called a "renaissance in beer."

"Nobody wants to take a seat at a bar and discover their only choices are between a Bud and a Miller," Sen. Chris Coons, D-Del., said.

Most of the Senators acknowledged the boom in craft brewers by giving a tip of the hat to small breweries in their home states. Sen. Amy Klobuchar, D-Minn., said craft breweries have increased their market shares from 1 to 20 percent in the past 20 years.

Even with Brito's assurances, the prospect of the merger pumping up beer prices and cracking down on craft brewers seemed to concern senators, given the history of such moves in the past.

"What we've seen in the past years is a trend towards massive beer behemoths in our market, and the result has not been a happy one for many consumers," Sen. Richard Blumenthal, D-Conn., said at the hearing.

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