WASHINGTON -- To acquire SABMiller, Anheuser-Busch InBev (ABI) must divest SABMiller’s entire U.S. business, including SABMiller’s ownership interest in MillerCoors, the right to brew and sell certain SABMiller beers in the United States and the worldwide Miller beer brand rights, the U.S. Department of Justice (DOJ) said on Wednesday.
The companies announced the deal, estimated at approximately $107 billion, in November 2015.
The settlement also prohibits ABI from instituting or continuing practices and programs that limit the ability and incentives of independent beer distributors to sell and promote the beers of ABI’s rivals, including high-end craft and import beers. And it precludes ABI from acquiring beer distributors or brewers without allowing for department review of the acquisition’s likely competitive effects.
As reported in a McLane/CSP Daily News Flash, this settlement will prevent any increase in concentration in the U.S. beer industry, said the DOJ.
“The remedy we secured will help preserve and promote competition in the multibillion dollar U.S. beer industry,” said Deputy Assistant Attorney General Sonia Pfaffenroth of the DOJ’s Antitrust Division. “The two largest U.S. brewers—ABI and MillerCoors—will now remain independent competitors after the deal.”
She continued, “The settlement also preserves the ability of smaller brewers—including brewers of craft and import beers—to compete against ABI by protecting their access to important distribution networks. Independent distributors that sell ABI’s beer will have the freedom to sell and promote the variety of beers that many Americans drink.”
The department’s Antitrust Division filed a civil antitrust lawsuit July 20 in the U.S. District Court for the District of Columbia to block the $107 billion transaction, along with a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit. The department’s complaint alleges that the proposed transaction would substantially lessen competition in the national market for the sale of beer in the United States and in at least 58 local markets in the United States.
According to the complaint, through its acquisition of SABMiller, ABI would gain a majority interest in MillerCoors. ABI and MillerCoors jointly account for approximately 70% of beer sold in the United States. The acquisition would create many highly concentrated local geographic markets, with some combined shares in excess of 90%.
According to a Competitive Impact Statement (CIS) that the DOJ also filed, the divesture of SABMiller’s interest in MillerCoors to Molson Coors alone was insufficient to remedy the competitive harm arising from the transaction. Molson Coors and ABI have interactions outside the United States that present opportunities to facilitate coordination in the United States—opportunities that MillerCoors does not presently have. To address this competitive concern, the settlement provides additional relief aimed at protecting the competitive constraint that other brewers provide—in particular, brewers of high-end craft and import beers—on ABI’s and Molson Coors’ ability to raise prices, either unilaterally or through coordination, on their beers, the DOJ said. The settlement prohibits ABI from instituting or continuing practices and programs that disincentivize distributors from selling and promoting the beers of ABI’s high-end and other rivals.
Leuven, Belgium-based AB InBev owns and operates 19 breweries in the United States. ABI owns more than 40 major beer brands sold in the United States, including Bud Light—the top-selling beer brand in the United States—and other beer brands, such as Budweiser, Busch, Michelob, Natural Light, Stella Artois, Shock Top, Goose Island and Beck’s.
Based in London, SABMiller operates in the United States through its 58% ownership interest in the MillerCoors joint venture.
SABMiller and Molson Coors, through their designated representatives, have an equal right to govern MillerCoors, Chicago, which owns and operates 12 breweries in the United States. It has the sole right to produce and sell more than 40 major brands of beer in the United States, including Coors Light and Miller Lite—the second- and fourth-highest selling beer brands in the country. MillerCoors also has the right to produce and sell other beer brands in the United States, such as Miller Genuine Draft, Coors Banquet and Blue Moon. Also, MillerCoors has the exclusive right to import into and sell in the United States certain beer brands owned by SABMiller, including Peroni, Grolsch and Pilsner Urquell.