Teamsters Urge Court Intervention to Protect Public Interest in Mega Beer Merger

WASHINGTON, Oct. 7, 2016 /PRNewswire-USNewswire/ -- In a comment letter submitted to the Antitrust Division of the U.S. Department of Justice (DOJ) this week, the International Brotherhood of Teamsters criticized the government's failure to effectively remedy the harm to competition resulting from the largest beer merger in history – the $107 billion merger of Anheuser-Busch InBev (ABI) [NYSE: BUD] with SABMiller.

The letter urges the District Court to exercise its authority and responsibility under the Tunney Act to deny approval of the settlement because it is not in the public interest.

The letter notes that the Tunney Act requires the court to take into account "…competitive considerations bearing upon the adequacy" of the proposed settlement. In this case, those "competitive considerations" include DOJ's past and present statements about competition in the beer industry, its past enforcement decisions in beer mergers, its own statements of enforcement policy and independent economic analysis of the competitive effects arising from past beer mergers.

Such competitive considerations are particularly relevant, as DOJ has alleged that the beer market is highly concentrated, has high entry barriers and is subject to tacit collusion between the two largest brewers in the United States, Anheuser-Busch InBev and MillerCoors. All of these factors have led to higher prices for beer drinkers.

DOJ explicitly states in its court papers that the ABI/SABMiller merger, even with the sale of SABMiller's stake in MillerCoors, could actually make the tacit collusion problem that has plagued the industry worse.

The remedy DOJ has proposed is to place certain conditions on ABI's distribution practices and ownership of distributors, and to require ABI to provide notice of future acquisitions prior to their consummation. DOJ accepted this weak settlement despite its own practice and policy of requiring divestitures in horizontal mergers, despite its own criticism of behavioral remedies and despite economic scholarship showing that such remedies rarely work.

The DOJ has accepted a highly uncertain and historically unacceptable behavioral remedy to combat a major and proven competitive problem.

The weakness of the remedy is all the more glaring given the alternative. DOJ could have ordered a structural remedy – the divestiture of a large, efficient and profitable brewery as it has done in prior mergers, such as the MillerCoors brewery in Eden, North Carolina that the company shut down.

The Eden brewery, as an operating entity, has been responsible for almost 4 percent of all U.S. beer production. It has been a profitable brewery. There were, and likely still are, interested purchasers who would operate the brewery if it is ordered divested. MillerCoors' decision, announced shortly before the merger, to shut down the brewery and not to sell it to a competitor shows conclusively that it is competitively significant.

"There is a straightforward and obvious fix to protect the public interest in this beer merger," said Jim Hoffa, Teamsters General President. "Forcing the sale of the dormant Eden brewery will help address anticompetitive effects of this merger, restore confidence in our country's antitrust enforcement and put people back to work in North Carolina. We urge the court to exercise its authority in this case."

Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico, including some 15,000 members working throughout the brewery industry. Visit www.teamster.org for more information. Follow us on Twitter @Teamsters and "like" us on Facebook at www.facebook.com/teamsters.

Contact:
Kara Deniz, (202) 624-6911
[email protected]

Logo - http://photos.prnewswire.com/prnh/20100127/IBTLOGO

SOURCE International Brotherhood of Teamsters

Related Links

http://www.teamster.org