AB InBev & SABMiller deal gets US approval
The DoJ says the settlement ensures that AB InBev and MillerCoors – the two largest US brewers – will remain independent competitors after the deal.
AB InBev had already pledged to sell SABMiller’s 58% stake in MillerCoors to Molson Coors when it formalized its offer for SABMiller in November last year.
The settlement also precludes AB InBev from acquiring beer distributors or brewers – including craft brewer acquisitions – without a department review of the competitive effects of such acquisitions.
‘Preserve and promote competition in the US beer industry’
The settlement seeks to address two key concerns from the US beer industry: the size of the AB InBev / SABMiller business following the merger; and the effect on small craft brewers.
Sonia Pfaffenroth, deputy assistant attorney general of the DoJ Antitrust Division, said, “The remedy we secured will help preserve and promote competition in the multi-billion dollar US beer industry.”
AB InBev is required to sell SABMiller's entire US business, including its interest in MillerCoors, the right to brew and sell certain SABMiller beers in the US and the worldwide Miller beer brand rights.
The DoJ settlement also says AB InBev is not allowed to run programs that might discourage independent beer distributors from selling and promoting rival beers, including craft and import brews.
AB InBev will also have to allow for a DoJ review of the likely competitive effects of any craft beer or beer distributor acquisitions.
What happens to America's top beer brands?
The DoJ says its settlement will ensure competition remains between top beer brands such as Bud and Miller Beers in the US.
The top selling beer brands in the US are: Bud Light (AB InBev), Coors Light (MillerCoors), Budweiser (AB InBev) and Miller Light (MillerCoors).
MillerCoors is a joint venture of SABMiller and Molson Coors Brewing Company in the US.
AB InBev, through its acquisition of SABMiller, could have gained a majority interest in MillerCoors.
Under the terms of the settlement, SABMiller’s stake in MillerCoors will be sold to Molson Coors, giving the latter full control of operations and the rights to all brands in the MillerCoors US portfolio.
Consequently, the top beer brands remain in competition.
AB InBev CEO Carlos Brito welcomed the decision from the DoJ, saying it represented a significant step forward in the deal.
“We will continue to invest heavily in the US, including our efforts to build our entire portfolio of brands, support and incentivize our wholesalers, and compete effectively in a dynamic and fast-changing market,” he said.
“While we will make some adjustments to certain aspects of our US sales programs and policies, our fundamental approach and commitment to this market will not change. We will continue to compete and win in the US marketplace going forward.”
What does the craft beer industry think?
The Brewers Association represents small and independent American brewers.
Speaking in response to the DoJ decision, Bob Pease, president and CEO, said: "While we continue to believe that the merger of the world’s two largest brewers is bad for both the beer industry and consumers, the DoJ’s significant requirements [...] appear to address some of our major apprehensions with the merger.
"We remain concerned about how past, pending and future acquisitions may shift the dynamics of the current beer market.
"We will continue to encourage the DoJ to monitor and, where necessary, take action to remedy any anti-competitive effects of ABI’s behavior in the US."
AB InBev has now obtained approval in 21 jurisdictions.
Clearance decisions, with or without conditions, have now been obtained in: North America (US and Canada); Asia-Pacific (Australia, India, and South Korea); Africa (Botswana, Kenya, Namibia, Swaziland, Zambia, Zimbabwe, and South Africa); Europe (the EU, Albania, Moldova, Turkey and Ukraine); and Latin America (Chile, Colombia, Mexico and Uruguay).
Approval in Ecuador is subject to certain conditions.
In Europe, AB InBev has agreed to sell SABMiller brands Peroni, Grolsch and Meantime to Asahi Group Holdings.
It is awaiting the decision of regulatory authorities in China, where it has already agreed to sell SABMiller's stake in Snow to China Resources Beer.