Antitrust Law Daily Wrap Up, ANTITRUST—D.D.C.: U.S. consent decree over brewer merger gets final approval, (Oct 25, 2013)

By Jeffrey May, J.D.

Six months after brewers Anheuser-Busch InBev SA/NV (ABI) and Grupo Modelo S.A.B. de C.V. reached a settlement with the Department of Justice Antitrust Division, resolving concerns over their proposed combination, the federal district court in Washington, D.C. has approved the U.S. consent decree (U.S. v. Anheuser-Busch InBEV SA/NV, October 24, 2013, Roberts, R.).

In January, the Justice Department filed a complaint, alleging that the $20.1 billion transaction, under which ABI would acquire the remaining portion of Modelo that it did not already own, would substantially lessen competition in the market for beer in the United States as a whole and in 26 metropolitan areas across the United States. ABI’s global brands include Budweiser, Bud Light, Stella Artois, and Beck’s. Modelo’s Corona Extra brand is the top-selling import in the United States.

The final judgment required the divestiture of Modelo’s entire U.S. business to Constellation Brands Inc. or to an alternative purchaser if for some reason the transaction with Constellation cannot be completed. After completing the acquisition in June, ABI announced that it had sold the Modelo U.S. operations to Constellation. Constellation was added as a defendant in the suit, because under the terms of the settlement, it was required to expand the capacity of Modelo’s Piedras Negras brewery near the Texas border, which was Modelo’s newest, most technologically advanced plant.

The final judgment came after a number of attempts by the brewers to satisfy the government’s antitrust concerns were rejected as inadequate. An original proposal to sell Modelo’s stake in its exclusive U.S. importer—Crown Imports—to Constellation and enter into a 10-year supply agreement to provide Modelo beer to Constellation to import into the United States was rejected on the ground that it would have eliminated the Modelo brands as an independent competitive force in the U.S. beer market. The federal district court stayed proceedings in the case multiple times while the parties attempted to reach a resolution.

As a result of the approval of this consent decree, the Antitrust Division currently has no civil settlements pending in the courts awaiting approval under the Tunney Act.

The case is Civil Action No. 13:127 (RWR).

Attorneys: Michelle R. Seltzer, U.S. Department of Justice, for plaintiff. Steven C. Sunshine (Skadden, Arps, Slate, Meagher & Flom LLP) for Anheuser-Busch InBev SA/NV. Richard J. Stark (Cravath, Swain & Moore LLP) for Grupo Modelo S.A.B. de C.V. Margaret H. Warner (McDermott Will & Emery LLP) for Constellation Brands, Inc.

Companies: Anheuser-Busch InBev SA/NV; Constellation Brands, Inc.; Crown Imports LLC; Grupo Modelo S.A.B. de C.V.

Cases: Antitrust AntitrustDivisionNews DistrictofColumbiaNews