After knowing InBev wanted to buy Budweiser (BUD) for half a year now, the Dept. of Justice struck a blow to keep beer prices down at Bills and Sabres games.
From the release:
The Department of Justice announced today that it will require InBev N.V./S.A. to divest subsidiary Labatt USA, along with a license to brew, market, promote and sell Labatt brand beer for consumption in the United States, in order to proceed with InBev’s $52 billion acquisition of Anheuser-Busch Companies Inc. The Department said that the transaction, as originally proposed, would likely have led to higher prices for beer in the Buffalo, Rochester and Syracuse, N.Y., metropolitan areas.
The Department’s Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., to block the proposed transaction. At the same time, the Department filed a proposed settlement that, if approved by the court, would resolve the lawsuit and the Department’s competitive concerns.
According to the complaint, Anheuser-Busch’s Budweiser brands, including Budweiser and Bud Light, and InBev’s Labatt brands, including Labatt Blue and Labatt Blue Light, are the two biggest selling beer brand families in Buffalo, Rochester and Syracuse. The original transaction would have eliminated competition between Labatt USA and Anheuser-Busch and resulted in higher prices to beer drinkers in those metropolitan areas.
Under the terms of the proposed settlement, InBev must sell Labatt USA and grant a license to the acquirer to brew and sell Labatt brand beer for consumption throughout the United States. The Department’s Antitrust Division must approve the purchaser of Labatt USA to ensure that the sale will restore the competition for beer sales in Buffalo, Rochester and Syracuse that existed before InBev purchased Anheuser-Busch.
“This divestiture will ensure that consumers will continue to benefit from the significant competition between the merging companies in upstate New York,” said Deborah A. Garza, Deputy Assistant Attorney General of the Antitrust Division.
In the large majority of markets in the United States, InBev accounts for less than two percent of beer sales and engages in very little competition with Anheuser-Busch. In contrast, sales of InBev’s Labatt beer brands in Buffalo, Rochester and Syracuse account for a significant portion of beer sales. The Department concluded that in those markets, the elimination of the competition between InBev and Anheuser-Busch would have resulted in higher prices for consumers. The proposed settlement will allow the purchaser of Labatt USA to sell the Labatt brands throughout the United States.
It the little things the government does that make you all warm and fuzzy towards it…
Disclosure (“none” means no position):None
Visit the ValuePlays Bookstore for Great Investing Books
