Antitrust Law

Anheuser-Busch is cleared to acquire Modelo after court accepts antitrust settlement

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The U.S. Department of Justice and Anheuser-Busch InBev (ABI) have resolved the antitrust lawsuit that threatened to derail the beer maker’s multibillion-dollar acquisition of competitor Grupo Modelo.

The DOJ filed suit in January in the U.S. District Court for the District of Columbia to block the merger, claiming it would give ABI control of nearly 50 percent of the U.S. beer market. But after months of negotiation, ABI’s revised transaction plan has allayed the DOJ’s competitive concerns, and a federal court has approved the deal, according to NPR.

Bill Baer, Assistant Attorney General for the DOJ’s Antitrust Division, calls the settlement a “win for the $80 billion U.S. beer market and consumers.” The settlement requires the divestiture of Modelo’s entire U.S. business, including licenses to all Modelo brands, its most advanced brewery, and other assets, to Constellation Brands Inc. As a result, Constellation will have complete control of the production, marketing and distribution of the Modelo brands in the U.S., creating a new competitor in the market.

Modelo is the third-largest brewer of beer sold in the United States, with popular high-end labels including Corona and Negra Modelo. Belgium-based ABI is the largest beer producer, with more than 200 beer brands, including top-ranked Bud Light. The company already holds a 50 percent stake in Modelo. The DOJ argued a merger of the two beer behemoths would result in higher prices and further restrict consumer choice.

ABI initially offered to sell Modelo’s interest in Crown Imports, which imports all Modelo beer, to Constellation—Crown’s other owner—as long as Constellation acquired no brands or breweries itself. The Justice Department dismissed ABI’s proposed remedy as legal maneuvering to avoid antitrust liability and filed suit. The final agreement makes Crown Beer a fully independent competitor in the U.S., with a Constellation-owned brewery fully supporting its success, making Crown the third largest beer company in the U.S.

ABI expects to complete the Modelo acquisition in June 2013.

Related article: “DOJ sues to block Anheuser Busch merger with Mexico’s Grupo Modelo”

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