Merger between Two Beer Giants Blocked by Feds

On Thursday, the U.S. Department of Justice filed a suit in federal court to stop the merger between Mexico’s largest brewery, Grupo Modelo and Anheuser-Busch InBev. The Justice Department argues that consumer pricing will suffer along with competition in the beer market if the two merge.

The deal is worth an estimated $20.1 billion and would bring together the largest and the third largest beer makers the U.S. had. It would add to the already huge portfolio of Anheuser that includes Beck’s, Stella and of course Budweiser. Grupo Modelo would bring one of the world’s fastest growing brands, Corona.

The merger was announced last summer by the two companies and would have brought further consolidation to the beer market, which has steadily been shrunk to just a few large breweries that are still in existence. The two largest left in the U.S. are AB InBev, which is based out of Belgium and Chicago’s MillerCoors makers of both Miller Lite and Coors.

On Thursday, antitrust officials said they filed suit, as they were worried that the market share of AB InBev would be increased through the purchase of a competitor. The Justice Department’s antitrust division said it was taking the action because they felt the merger would be a bad deal for U.S. consumers.

For many years, merger of large corporations took place with very few eyebrows raised by the government from their entity to control antitrust violations.

However, the latest suit, along with one last year blocking the T-Mobile and AT&T merger are just signs showing the Obama  administration does not have any qualms about fighting a legal battle in court to block deals they feel could hurt the consumer.

 

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