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Justice Dept. seeks to block Budweiser-Corona merger

By Pete Yost

Associated Press

LAST UPDATED: 07:22 a.m. HST, Jan 31, 2013

WASHINGTON » The Justice Department today 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.

The government said the deal could lead to higher beer prices in this country because it would substantially reduce competition in the U.S. beer market, particularly in 26 metropolitan areas. It said the merged firm would control nearly half the beer sales in the U.S.

In response, Anheuser-Busch InBev promised a court fight to preserve its deal.

Americans spent at least $80 billion on beer last year. ABI's Bud Light is the best-selling beer in the nation and Modelo's Corona Extra is the best-selling import.

The Justice Department's lawsuit in federal court in Washington, D.C., seeks to prevent the merger and to continue competition between the firms.

Bill Baer, the assistant attorney general in charge of the department's antitrust division, says Anheuser-Busch InBev (ABI) would be able to increase beer prices to U.S. consumers if the merger were to go through.

ABI is the largest U.S. brewer and Modelo is the third and together, the two firms control about 46 percent of annual sales in the U.S.

MillerCoors, the second-largest beer company, accounts for 29 percent of nationwide sales.

Anheuser-Busch InBev said the government's bid to block the proposed merger is inconsistent with the law, the facts and "the reality of the market place."

"We remain confident in our position, and we intend to vigorously contest the DOJ's action in federal court," ABI said.

According to court papers filed in the case, ABI acts as the industry price leader, with MillerCoors and other brewers typically joining the price increases set by ABI. Modelo, in contrast, has not joined.

By pricing aggressively, Modelo — through its importer, Crown Imports — puts pressure on ABI to maintain or lower prices.

"Today, 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," the Justice Department court filing said. "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."

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ya_think wrote:
Yet they don't have a problem with China buying up US companies including ones that deal with the security of this country.
on January 31,2013 | 06:43AM
droid wrote:
That’s not a fair analogy, since Budweiser is no longer an American company. InBev Anheiser-Busch is a Belgian-Brazillian corporation. I would be more concerned if this deal involved Sam Adams.
on January 31,2013 | 08:41AM
toomuchpilikia wrote:
The "Justice Department" is not justified to get involved in this area!
on January 31,2013 | 07:31AM
silvangold wrote:
watch.....pretty soon it'll be just like what they did to the tobacco companies. because THEY wanted nobody to smoke they put the makers/growers out of business................way less sales..... so now they want to (actually they do) stop people from drinking and driving (which is not bad, don't get me wrong) but why should the government have any say in who merges with whom - its private businesses wanting to come together.....my husband is right you know, soon we're going to have to get a license or permits or whatever when we want to go to the bathroom in our own home.....or goodness - who knows what else!
on January 31,2013 | 07:54AM
SteveToo wrote:
Both are foreign owned companies so how can the US tell them what to do?
on January 31,2013 | 09:59AM
Fred01 wrote:
I'm glad the government is watching out for us and trying to keep beer prices low!
on January 31,2013 | 11:42AM
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