Consumer Groups Weigh In On $100B InBev, SABMiller Deal

Source: Law360

By Matthew Guarnaccia

June 7, 2017

A pair of consumer advocacy groups on Tuesday asked a District of Columbia federal judge to allow them to weigh in on the $100 billion acquisition of SABMiller by Anheuser-Busch InBev as they seek increased scrutiny of the antitrust fixes required to complete the deal.

The motion by Consumer Action and Consumer Watchdog is part of the lawsuit filed by the U.S. against AB InBev and SABMiller to determine whether the antitrust remedies laid out by the U.S. Department of Justice are adequate to prevent a loss of competition in the beer industry The DOJ entered into a proposed final judgment with AB InBev in July, allowing the world’s largest brewer to complete the deal as long as SABMiller divested its U.S. interest in MillerCoors, among other fixes.

But in their proposed amicus brief on Tuesday, Consumer Action and Consumer Watchdog urged U.S. District Judge Emmet Sullivan to fully consider the proposed final judgment, expressing concerns held by by smaller industry players and others that the deal would not sufficiently alleviate anti-competition concerns. They said that the DOJ admitted in its July 20 complaint that AB InBev has engaged in anti-competitive activities for years, and argued that the beer industry will be harmed if Judge Sullivan approves the proposed final judgment as written.

Specifically, Consumer Action and Consumer Watchdog take issue with the fact that AB InBev is allowed to acquire craft breweries after the merger. The pair said that although new entry from craft breweries increases choice and innovation, the ability of AB InBev to scoop up those smaller entities, and with it their sources of distribution, is clearly anti-competitive.

That is evidenced by the fact that AB InBev has purchased nine “regionally significant” craft breweries since 2011, including Goose Island in Illinois, Devil’s Backbone in Virginia and Karbach Brewing Co. in Texas.

“ABI is at no loss in demonstrating that it intends to continue to grow through acquisitions of high-end brewers to harm rival brewers and potentially replace them on shelves and taps,” the consumer groups said.

The pair also took issue with the ability of AB InBev to purchase additional distributors as well, as the company has implemented a plan to acquire more in various markets around the country. Although the proposed final judgment caps distribution ownership at 10 percent of the volume across the U.S., a number of consumer and industry groups argued that anything short of a full ban on distributor acquisition would be problematic to competition.

Consumer Action and Consumer Watchdog asked Judge Sullivan to hold a public hearing on the matter, urging him to not simply “rubber-stamp” the approval of the proposed final judgment.

To receive antitrust clearance, AB InBev divested SABMiller’s joint venture interest in MillerCoors to its JV partner Molson Coors for $12 billion. It also sold SABMiller’s Central and Eastern Europe interests to Japan’s Asahi Group Holdings Ltd. in December in a deal worth ?7.3 billion ($7.75 billion).

Andre P. Barlow of Doyle Barlow & Mazard PLLC, counsel for Consumer Action and Consumer Watchdog, told Law360 in a statement on Wednesday that simple structural remedies such as divestitures have shown in the past to not be effective at restoring competition.

“The bottom line is the settlement agreement needs to be strengthened to keep beer distribution open and independent to protect consumer choice,” Barlow said.

Counsel for the U.S., SABMiller and AB InBev did not immediately respond to requests for comment on Wednesday.

The U.S. is represented by U.S. Attorneys Michelle R. Seltzer, David C. Kelly and David M. Stoltzfus.

SABMiller is represented by Janet L. McDavid of Hogan Lovells.

AB InBev is represented by Christine A. Varney of Cravath Swaine & Moore LLP.

Consumer Action and Consumer Watchdog are represented by Andre P. Barlow of Doyle Barlow & Mazard PLLC.

The case is United States of America V. Anheuser-Busch InBev SA/NV et al., case number 1:16-cv-01483, in the U.S. District Court for the District of Columbia.