January 21, 2016

Dick Wegener: Price Competition ‘Only Part of the Equation' in DOJ's Probe of AB InBev, SABMiller Merger

As AB InBev pursues a $108 billion merger with SABMiller, antitrust regulators in the U.S. Department of Justice (DOJ) are looking into the deal’s potential impact on competition in the beer industry. According to an article published in CTFN News, the companies have agreed to divest SABMiller’s majority stake in MillerCoors to decrease their potential market share and satisfy DOJ regulators, but the DOJ “has not taken the bait and instead has broadened its investigation to focus more closely on the vertical aspects of the brewer combination.” Dick Wegener, Faegre Baker Daniels counsel, told CTFN that the DOJ, which has considered at least five major beer mergers since 2004, is “getting smarter and smarter” about mergers in this industry.

“Deals in this industry are complicated, because the concern about price competition between the brands—here, Bud, Miller and Coors—is only part of the equation; you also have to look at the effect of the transaction on competition between distributors and wholesalers,” Wegener said. “Consolidation among distributors would make it harder for smaller brewers—such as the craft brewers—to get distribution.”

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