Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: EC conditionally clears AB InBev, SABMiller deal, (May 24, 2016)

By Greg Hammond, J.D.

The European Commission (EC) has cleared Anheuser-Busch InBev’s (AB InBev’s) proposed acquisition of SABMiller plc, but conditioned approval on AB InBev selling essentially the entire SABMiller beer business in Europe. The EC noted concerns that the deal between the two largest brewers in the world could lead to higher beer prices in Member States where SABMiller is currently active, and could make tacit coordination between the leading international brewers more likely.

AB InBev is the largest brewer in the world, selling brands such as Corona, Stella Artois, Beck’s, and Budweiser. Similarly, SABMiller is the second largest brewer in the world, selling brands like Victoria Bitter, Carlton, and Crown Lager.

The EC found that the proposed merger would have: (1) removed an important competitor at the level of the overall national beer markets or in important market segments in Italy, the Netherlands, the UK, Romania, and Hungary; (2) created a substantial link between Molson Coors and the market leader, AB InBev/SABMiller, in the Czech Republic, Hungary, Romania, and Slovakia; and (3) likely facilitated tacit price coordination among brewers in the European Economic Area through an increase in the number of multimarket contacts.

As a result of its concerns, AB InBev has offered to divest all of SABMiller’s business in France, Italy, the Netherlands, and the UK, and has already accepted an offer from Japanese brewer Asahi. In addition, AB InBev has offered to divest SABMiller’s business in the Czech Republic, Hungary, Poland, Romania, and Slovakia. These commitments address all of the EC’s competition concerns, according to the agency, including the concerns regarding an increased number of multimarket contacts.

“Today’s decision will ensure that competition is not weakened in these markets and that EU consumers are not worse off,” EC Commissioner Margrethe Vestager, in charge of competition policy, stated. “Europeans buy around 125 billion euros of beer every year, so even a relatively small price increase could cause considerable harm to consumers. It was therefore very important to ensure that AB InBev’s takeover of SABMiller did not reduce competition on European beer markets.”

The Australian Comeptition & Consumer Commission also cleared the merger earlier this month.

United States review. The deal remains under review by the U.S. Department of Justice Antitrust Division. Lawmakers expressed concern at a hearing before the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, claiming that the proposed merger could allow the companies to use their power over distributors to squeeze out smaller craft brewers. The CEOs of AB InBev and SABMiller, however, maintained that the merger is pro-competitive and efficient.

American Antitrust Institute (AAI) president Diana Moss outlined competitive concerns raised by the proposed merger in an April 25 letter addressed to Acting Assistant Attorney General Renata B. Hesse. Moss made a case that—in the event the Justice Department does not block the transaction—the remedy should enhance consumer welfare and restore competition.

Companies: SABMiller plc; Anheuser-Busch InBev

News: AcquisitionsMergers Antitrust