Beer Drinkers Fight|Anheuser-Miller Merger


     MEDFORD, Ore. (CN) – Anheuser-Busch InBev’s $108 billion merger with SABMiller will create a “global beer behemoth” that will raise beer prices and restrain trade, 23 people from three states say in a federal antitrust complaint.
     Lead plaintiff James DeHoog says the merger of the largest and second-largest brewers in the country would create a monopoly in manufacturing and distribution and squeeze out smaller brewers. His complaint is the Top Download today for Courthouse News.
     The merger, announced in early November, would combine Anheuser-Busch InBev’s Budweiser, Michelob, Corona and other brands with SABMiller’s Miller, Coors, Pabst and others.
     ABI InBev’s 200 brands brought in $47 billion in 2014, more than 46 percent of the U.S. market, according to the Dec. 1 complaint. SABMiller’s $22.3 billion in sales that year accounted for 25 percent of U.S. beer sales.
     The merged companies therefore would control 71 percent of the U.S. beer market, with an overwhelming advantage in distribution.
     If approved, it would be one of the largest mergers in corporate history, giving the company control almost one-third of the world’s beer.
     To satisfy antitrust concerns, SABMiller said it will sell its 58 percent stake in Chicago-based MillerCoors. It also agreed to give MolsonCoors U.S. rights to sell SABMiller foreign brands in the MillerCoors portfolio, such as Peroni and Pilsner Urquell.
     The Senate Judiciary Committee’s antitrust subcommittee will hold a hearing on the merger on Tuesday, Dec. 8. Witnesses will include AB InBev CEO Carlos Brito, Molson Coors CEO Mark Hunter, J. Wilson with the Iowa Brewers Guild, and Diana Moss, president of the American Antitrust Institute.
     In the Tuesday lawsuit, DeHoog says the merger will violate Section 7 of the Clayton Antitrust Act.
     His attorney Christopher Cauble told Courthouse News that Oregon is the best place to litigate “simply because of the large ‘craft’ beef industry here that could be devastated in competing with one company that would control around 90 percent of the American beer market.”
     The defendants sell more than $1 billion of beer in Oregon each year, and the merger could smash the state’s healthy and growing craft brewers, according to the complaint.
     Oregon has the third-largest craft beer industry per capita of the 50 states, is in the top five nationally in per capita beer consumption, and has 216 craft breweries, according to the complaint.
     Oregon craft brewers turn out more than 1 million barrels a year, with an economic impact of nearly $2 billion, and about 75 of the craft brewers are in Southern Oregon, where the lawsuit was filed.
     “Southern Oregon is one of the most concentrated craft beer markets in the world,” the complaint states, and its businesses would be “substantially” affected if the merger is approved.
     Cauble said his clients “expect to see craft breweries joining in these cases to stop a very dangerous acquisition that could cost increase costs, lower quality, and [give the defendants] a major competitive advantage.”
     Underlining the massive advantage the merger would give the new company, DeHoog say, the third-largest brewer of beer in the world, Heineken, controls only 4 percent of the beer market in United States.
     The combined AB InBev and SABMiller company would have a market value of roughly $275 billion, according to the complaint. That would give beer drinkers “higher prices, fewer services, fewer competitive choices, diminished product quality and product diversity, suppression and destruction of smaller actual competitors,” according to the complaint.
     In addition, AB InBev has the country’s largest network of independent distributors, about 600 of them, most of which operate under exclusive agreements in which they agree not to deal with any competitors’ products and not to distribute them outside of their own designated territories.
     “The proposed acquisition is likely to lead to a decrease in small brewers’ access to distributors,” the consumers say in the lawsuit.
     John Blood, vice president of legal and corporate affairs for AB InBev, said the claims are without merit.
     “The U.S. beer market has never been more competitive, with strong growth from craft brewers, and nothing in this transaction will change that fact. Instead, this transaction provides a compelling opportunity to extend the reach of AB InBev’s iconic American brands, such as Budweiser, to markets outside of the United States,” Blood said.
     Since 2011 the number of U.S. craft breweries has more than doubled, from 1,776 to 3,739. Craft beer sales rose by 17.6 percent in 2014 to capture 11 percent of the market, compared to an overall beer sales increase of only 0.5 percent that year.
     In late November a bipartisan group of U.S. senators, including Angus King in Maine and Jeff Merkley in Oregon, urged the U.S. Department of Justice to protect craft brewers across the country from potentially unfair and illegal trade practices from larger beer companies.
     Distributorships are the key pressure point where beer giants could effectively crush their competitors, but making it difficult to send their beers to stores, bars and restaurants.
     “As members with robust craft brewing industries in our states, we ask that you take the necessary steps to ensure that AB InBev’s purchase of SABMiller does not allow the new combined company to squeeze out America’s craft brewing industry,” the senators said in their letter to Attorney General Loretta Lynch.
     They urged Lynch to “vigorously scrutinize the acquisition and any divestiture plan to ensure that AB InBev does not increase its already-dominant market position through the transaction.”
     The plaintiffs, from Oregon, Washington and California, want the merger enjoined, and costs of suit.
     Cauble, of Grants Pass, is assisted by Joseph Alioto, of San Francisco, and others.

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