The U.S. Department of Justice has filed an anti-trust lawsuit against Anheuser-Busch InBev.
The government alleges the company's plans to purchase Mexican brewer, Grupo Modelo, would give AB-InBev monopoly power to set prices.
Bill Baer, DOJ's top anti-trust official said the removing Modelo as an aggressive competitor to Anheuser-Busch InBev would give the company too much leverage to drive up prices.
"We took this action today because we believe the acquisition is a bad deal for American consumers," says Baer. "It will lessen competition in the market for beer in a number of local markets across the United States and nationwide.”
Baer's comments are based on evidence indicating that while mega-brewer Miller often followed AB’s strategy of gradually raising prices each year for its most popular brands, Modelo (maker of brands such as Corona and Modelo Especial) often refused to play along, costing them market share and forcing the company to roll back prices.
Baer went on to say that the $80 billion beer industry is already consolidated enough and taking the country's largest brewer, AB-InBev and the third largest, Grupo Modelo would create a super company with monopoly powers.
"It would concentrate the beer industry further, it would enhance ABI's market power and it would make it easier for the remaining companies to engage in coordinated 'leader-follower' type pricing strategies in the future," Baer notes.
AB-InBev already owns about half of Modelo, and is attempting to purchase the other half for $20.1 billion
In a statement, A-B InBev vowed to "vigorously" fight the lawsuit, which it called "inconsistent with the law, the facts and the reality of the market place."
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