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Thursday, September 11, 2008

Cool, But Doomed

Ten lone beer drinkers have saddled up to ride into battle against mighty InBev:
The group filed a federal lawsuit Wednesday claiming Belgium-based InBev’s $52 billion purchase of Anheuser-Busch Cos. Inc. would violate U.S. antitrust law if completed as planned in the coming months.

The suit, filed in Anheuser-Busch’s hometown of St. Louis, does not seek financical damages but asks a judge to block the deal. The Department of Justice often reviews large acquisitions to determine if they are legal under U.S. law. But attorneys behind the lawsuit said they want to halt the deal regardless of the verdict in Washington.

A doomed venture, but as someone who regularly signs on for doomed ventures, this beguiles.
The suit filed Tuesday challenges the deal’s legality on different grounds. It says the merged brewery, to be called Anheuser-Busch InBev, would have a monopoly over beer production in the United States. The lawsuit argues that combining two of the world’s biggest breweries will reduce competition.

“If InBev is allowed to purchase Anheuser-Busch, there no longer would be any significant major potential competitor to influence pricing and marketing practices in the United States.” the suit says.

They're doing it as Bud drinkers, but their point is relevant to the rest of us, too. This does look pretty monopolistic. A-B has half the market, and now you add one of the major players in imports and it does seem likely to unbalance things. Not that will matter a whit to regulators, who have approved mergers of companies with far greater stakes in their industries. (That there are 1,500 US brewers also deflates the argument somewhat.)

Nevertheless, I say Godspeed, men! (Hat tip: John.)

1 comment:

Joe said...

This seems monopolistic when viewed through the narrow lense of beer. However, depending on how the marketplace is defined it may not be viewed that way at all. For instance is beer viewed as one of many alcoholic choices, or even more broadly drink choices? Does a merger actually benefit consumers via lower prices through cost reduction?

It is easy for us beer lovers to classify beer as an independent and distinct category, but is that how the global marketplace truely functions?

A recent example is the merger of Sirius and XM, the only two satelite radio providers. Ultimately this will pass anti-trust scrutiny because satelite radio competes with terestrial radio, ipods, cds, HD radio, etc, not just each other. It all depends on how the marketplace is defined.

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