fb-pixelUS sues to block brewery takeover - The Boston Globe Skip to main content

US sues to block brewery takeover

Anheuser-Busch InBev’s Bud Light is the best-selling beer in the United states, and Grupo Modelo’s Corona Extra is the best-selling import. Joe Raedle/Getty Images

WASHINGTON — The Justice Department filed a lawsuit Thursday to stop Anheuser-Busch InBev’s proposed $20.1 billion purchase of Mexican brewer Grupo Modelo, which would unite the ownership of popular beers like Budweiser and Corona.

The government said the deal could lead to higher beer prices in this country because it would substantially reduce competition in the US beer market, particularly in 26 metropolitan areas. It said the merged firm would control nearly half the beer sales in the United States.

In response, Anheuser-Busch InBev promised a court fight to preserve its deal.

Americans spent at least $80 billion on beer last year. ABI’s Bud Light is the best-selling beer in the nation, and Modelo’s Corona Extra is the best-selling import.


The Justice Department’s lawsuit in federal court in Washington seeks to prevent the merger and to continue competition between the firms.

Bill Baer, the assistant attorney general in charge of the department’s antitrust division, says Anheuser-Busch InBev, also referred to as ABI, would be able to increase beer prices to US consumers if the merger were to go through.

ABI is the largest US brewer and Modelo is the third; together, the two firms control about 46 percent of annual sales in the United States.

MillerCoors, the second-largest beer company, accounts for 29 percent of nationwide sales.

‘‘What we saw was a pattern of behavior’’ in which the ‘‘big folks were working hard to get price increases and Modelo was a significant constraint’’ on that behavior, Baer said in an interview with reporters.

Baer said that in the run-up to Thursday’s action, the two sides engaged in ‘‘frank and candid discussions’’ but ‘‘at the end of the day, we were just too far apart.’’

ABI said the government’s bid to block the proposed merger is inconsistent with the law, the facts and ‘‘the reality of the market place.’’


‘‘We remain confident in our position, and we intend to vigorously contest the DOJ’s action in federal court,’’ ABI said.

According to court papers filed in the case, Anheuser-Busch InBev acts as the industry price leader, with Miller­Coors and other brewers typically joining the price increases set by ABI. Modelo, in contrast, has not joined.

By pricing aggressively, Modelo — through its importer, Crown Imports — puts pressure on ABI to maintain or lower prices.

‘‘Today, Modelo aggressively competes head to head with ABI in the United States,’’ and ‘‘that competition has resulted in lower prices and product innovations that have benefited consumers across the country,’’ the Justice Department court filing said. ‘‘The proposed acquisition would eliminate this competition by further concentrating the beer industry, enhancing ABI’s market power, and facilitating coordinated pricing between ABI and the next largest brewer, MillerCoors LLC.’’

The government lawsuit harms the chances of Constellation Brands’ related $1.85 billion deal that would land it greater US control of Corona and other beers. Constellation was to buy the remaining half of a joint venture with Grupo Modelo, Crown Imports LLC, that has allowed Constellation to import, market, and sell Modelo beers in the United States for nearly 20 years.

The deal with Constellation was intended to alleviate antitrust concerns. But the Justice Department said that it wasn’t enough to protect US beer buyers. Constellation had said its deal would have made it the third-biggest total beverage alcohol company in the United States.


After the Justice announcement, shares of Anheuser-Busch InBev fell more than 5 percent while Constellation Brands Inc. shares lost 20 percent.

US-based Anheuser-Busch was purchased by Belgium-based InBev in 2008.