Government blocks AB InBev deal for Modelo

January 31st, 2013 | Posted by Real Beer

The U.S. sued to block Anheuser-Busch InBev’s proposed $20.1 billion purchase of the half of Grupo Modelo brands it doesn’t already own, stating that the deal would violate antitrust law.

Shares of both companies plunged after the Justice Department filed a complaint in federal court in Washington. The DOJ said the proposed purchased would eliminate the “substantial head-to-head competition” that currently exists between AB InBev and Modelo.

Modelo owns the Corona brand, and Budweiser and Corona are among the most dominant beer brands in the country. Bud Light is the best-selling U.S. beer, while Corona Extra is the No. 1 selling import.

“If ABI fully owned and controlled Modelo, ABI would be able to increase beer prices to American consumers,” Bill Baer, the head of department’s antitrust division, said in a statement. “This lawsuit seeks to prevent ABI from eliminating Modelo as an important competitive force in the beer industry.”

The Justice Department’s action is “inconsistent with the law, the facts and the reality of the marketplace,” according to an ABI statement. “We remain confident in our position, and we intend to vigorously contest the DOJ’s action in federal court.”

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