DOJ Forcing InBev to Sell Labatt Beer

The soon to be world's largest brewing company, InBev (brewer of beers such as Bass, Stella, Labatt, and Becks), was ordered today to divest of its assets in Labatt Beers. The issue stems from InBev's merger with Anheuser-Busch that began on July 13, 2008. At the time, Anheuser-Busch was the largest American brewer capturing 50% of the U.S. market, and InBev was the largest European and South American brewer making it the world's second largest brewer. On November 14, 2008 the Department of Justice (DOJ) Antitrust Division filed a civil antitrust complaint arguing that the merger violated Section 7 of the Clayton Act, substantially lessening competition or tending to create a monopoly in the Rochester, Syracuse, and Buffalo regions of New York where Labatt beer directly competes with Anheuser-Busch beer.

The judge, James Robertson of the U.S. District of Court for the District of Columbia, just filed his ruling considering the parties' proposed Final Judgement reviewed under the Tunney Act (analyzing whether the action is in the public interest). The proposal required InBev to sell Labatt, and to allow DOJ to vet the purchaser and the terms of sale, and requiring DOJ to approve both prior to completing the sale. Analyzing the proposal, the judge found it to be in the public's best interest. Labatt and Anheuser-Busch each held about 25% of the market share in the areas in question, for a combined market share of approximately 50% post merger (45 percent of the Rochester and Buffalo markets and 41 percent of the Syracuse market). The judge found the anticompetitive effects not sufficiently mitigated by efficiencies generated, increases in supply by existing competitors, nor the possible entry of a meaningful competitor.

Several groups commented on the proposal, including a Missouri beer drinkers' group who argued that the entire merger was against the public interest. The judge rejected this argument and approved the sale of Labatt.

View the Memorandum Order here.