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Friday, June 14, 2024 | Back issues
Courthouse News Service Courthouse News Service

U.S. Blocks Beer Merger

WASHINGTON (CN) - The Justice Department today filed an antitrust complaint against Anheuser-Busch InBev's $20.1 billion purchase of Grupo Modelo, maker of the country's best-selling imported beer, Corona.

The Justice Department said the proposed merger would reduce competition for the nation's $80 billion annual beer market in 26 metropolitan areas and in the country at large.

Anheuser-Busch InBev's Bud Light is the best-selling beer in the United States and Modelo's Corona Extra is the best-selling import.

InBev, of Belgium, bought St. Louis-based Anheuser Busch for $52 billion in 2008.

"Because of the size of the beer market in the United States, even a small increase in the price of beer could result in billions of dollars of harm to American consumers," the Justice Department said in a statement.

The federal complaint, filed in the District of Columbia, seeks to block the merger and preserve the competition between the beer giants.

Anheuser-Busch InBev is the nation's biggest beer brewer and Modelo is the third-largest. Together they control 46 percent of the U.S. beer market. MillerCoors, the second-largest, has about 29 market share, the Justice Department said.

Anheuser-Busch InBev makes Busch, Budweiser, Michelob and other brands.

Modelo makes Corona, Modelo Especial and other beers, including Negro Modelo.

With 75 percent of the U.S. beer market controlled by three companies, the market already is highly concentrated.

Anheuser-Busch InBev "generally acts as the price leader, implementing annual price increases in the sub-premium, premium and premium plus segments of the U.S. beer industry," the Justice Department said in its statement. "MillerCoors and other brewers have typically joined the ABI price increases, while Modelo has not. By pricing aggressively, Modelo - through its importer, Crown Imports - puts pressure on ABI to maintain or lower prices, especially in certain parts of the country. As a result, Modelo has become a particularly important competitor in the U.S. market."

The complaint cites years of Anheuser-Busch InBev documents discussing its concerns with competition from Modelo. Anheuser-Busch InBev introduced Bud Lite Lime in 2008 to try to complete with Corona.

It's common to add lime to beer in Mexico.

Anheuser-Busch InBev has annual revenue of $39 billion, the Justice Department said. It also has a 43 percent voting interest and 50.35 percent economic interest in Modelo. It wants to buy up the rest of it.

Modelo, based in Mexico, has annual reported revenue of $7 billion.

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