Justice Dept Wants to Block Bud/Corona Merger


The Justice Department has filed a lawsuit to stop Anheuser-Busch InBev’s proposed $20.1 billion purchase of Mexican brewer Grupo Modelo, which would unite the ownership of popular beers like Budweiser and Corona.
Reduction of competitive beer companies could potentially increase the cost of beer, and the potential merged firm, “would control nearly half the beer sales in the U.S.,” according to a report at NBCLatino.
Anheuser-Busch InBev (ABI) plans to retaliate in court. The Justice Department seeks to block the merger, and desires to keep an array of competitive beer firms.
Generally, “ABI acts as the industry price leader, with Miller, Coors and other brewers typically joining the price increases set by ABI. Modelo, in contrast, has not joined,” the article said.
According to the Justice Department, “Modelo aggressively competes head-to-head with ABI in the United States” and “that competition has resulted in lower prices and product innovations that have benefited consumers across the country.” Also, “The proposed acquisition would eliminate this competition by further concentrating the beer industry, enhancing ABI’s market power, and facilitating coordinated pricing between ABI and the next largest brewer, MillerCoors LLC.”
“The government lawsuit harms the chances of Constellation’s related $1.85 billion deal that would land it greater U.S. control of Corona and other beers. Constellation was to buy the remaining half of a joint venture with Grupo Modelo, Crown Imports LLC, that has allowed Constellation to import, market and sell Modelo beers in the U.S. for nearly 20 years,” the article added. If the bill had passed, Constellation would have been the third biggest beverage alcohol company in the United States.
US-based Anheuser-Busch InBev (ABI) is the world’s biggest brewer, and produces Budweiser, Beck’s, and Stella Artois, to name a few.