US: Anheuser-Busch InBev hit with Grupo Modelo anti-trust lawsuit by US Government

By | 31 January 2013

The Department of Justice  filed the lawsuit against Anheuser-Busch InBev today

The Department of Justice filed the lawsuit against Anheuser-Busch InBev today

The US Department of Justice has moved to block Anheuser-Busch InBev's proposed takeover of Mexico's Grupo Modelo.

In a statement today (31 January), the DoJ said it has filed an anti-trust lawsuit against the US$20.1bn deal. It said the takeover, first announced last June, would “substantially lessen competition” in the US beer market, meaning consumers would pay more for beer and have less choice. 

The DoJ noted that A-B InBev's Bud Light is the US' best-selling beer, while Modelo's Corona Extra is the best-selling import. “Because of the size of the beer market in the United States, even a small increase in the price of beer could result in billions of dollars of harm to American consumers,” the DoJ said.

Bill Baer, assistant attorney general in charge of the Department of Justice’s anti-trust division, said: "The department is taking this action to stop a merger between major beer brewers because it would result in less competition and higher beer prices for American consumers."

He added: “If A-B InBev fully owned and controlled Modelo, A-B InBev would be able to increase beer prices to American consumers. This lawsuit seeks to prevent A-B InBev from eliminating Modelo as an important competitive force in the beer industry.”  

The move is a major setback to A-B InBev's plans to capture the Mexican brewer. However, the Belgium-headquartered group struck a note of defiance. In a statement, it said the DoJ's action is “inconsistent with the law, the facts and the reality of the market place.”

It added: “We remain confident in our position, and we intend to vigorously contest the DOJ's action in federal court.”

Fears had been raised the deal would be affected by anti-trust concerns, but A-B InBev had previously insisted the deal would complete by the first calendar quarter. But it added: “Given today's development, we no longer expect the deal to close during the first quarter of 2013. We will comment further once we have reviewed the DOJ filing.” 

The DoJ's shock move also puts into doubt Constellation Brands' acquisition of Crown Imports. The California-based company was due to take full control of Crown by buying out its JV parner Modelo's stake. Shares in Constellation were today down by 20.4% at $31.17.

Expert analysis

Anheuser-Busch InBev NVSA (ABI) - Financial and Strategic SWOT Analysis Review

Anheuser-Busch InBev NV/SA (AB InBev) is producer and distributor of alcoholic and non alcoholic beverages. The company, along with its subsidiaries, engages in the business of brewing and sale of beer and few non-alcoholic beverages, across the world. AB InBev is also involved in the export of beer and operation of one Theme Park in the US. The company manages a portfolio of nearly 200 beverage brands. It has operations in over 23 countries, across the US, Europe and Asia Pacific, and sells its products in over 130 countries. AB InBev's key brands include Budweiser, Stella Artois, Beck’s, Leffe, Hoegaarden, Skol, Bud Light and Staropramen. The company is headquartered in Leuven, Belgium. The strategic intent of the company is to form new alliances, enter new markets and improve its revenue. In the line with this strategy, recently, the company announced that it will acquire the remaining stake in Grupo Modelo, the Mexican brewing company.

Sectors: Beer & cider, Legislation, Mergers & acquisitions

Companies: InBev, Modelo, Constellation

View next/previous articles

Currently reading -

US: Anheuser-Busch InBev hit with Grupo Modelo anti-trust lawsuit by US Government

There are currently no comments on this article

Be the first to comment on this article

Related research

Anheuser-Busch InBev NV/SA : Consumer Packaged Goods - Company Profile, SWOT & Financial Report

Canadean's "Anheuser-Busch InBev NV/SA : Consumer Packaged Goods - Company Profile, SWOT & Financial Report" contains in depth information and data about the company and its operations. The profile contains a company overview, key facts,major product...

Anheuser-Busch InBev NV in Alcoholic Drinks (USA)

Anheuser-Busch InBev (A-B InBev) is facing challenges in the mature US beer category by focusing on premium and craft beer. As the US Justice Department precluded A-B InBev from controlling the lucrative Modelo brands in the US, the company will push...

Anheuser-Busch InBev NV in Beer (World)

A-B InBev is the leading global brewer with 18% of global beer volumes, and the company is well placed to take advantage of expected volume growth in emerging markets, especially in Mexico following its Modelo acquisition, and value growth in high-ma...

Related articles

just the Preview - PepsiCo Q2 & H1

PepsiCo will report its second-quarter and first-half numbers on Wednesday (24 July). Here just-drinks takes a look at the group's activities in the three months to the end of June.

just For Subscribers - The week in drinks

Here are the ten most viewed, subscriber-only items on just-drinks this week:

MEXICO: Grupo Modelo steps up Corona football sponsorship

Grupo Modelo is adding to the list of football teams in Mexico it sponsors through its lager brand Corona, as it ups its involvement in the sport.

just-drinks tagline

Not a member? Join here

Decrease font sizeDecrease font sizeDecrease font size Increase font sizeIncrease font sizeIncrease font size Comment on this article Email this to a friend Print this page