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DOJ sues to block beer merger

The agency argues that the deal between Anheuser Busch InBev and Grupo Modelo would lead to increased beer prices for consumers

The Department of Justice (DOJ) sued on Thursday to prevent Anheuser Busch InBev’s proposed $20.1 billion acquisition of Grupo Modelo, which exports Corona beer.

Federal authorities say that the deal would lead to higher prices for consumers, arguing in court filings that Modelo has historically put pressure on AB InBev, which produces Budweiser and other beers, to keep prices lower by refusing to raise its own prices. The DOJ specifically cited internal InBev documents in which company employees described Modelo’s tactics as “eating [Budweiser’s] lunch.”

Belgium-based AB InBev, on the other hand, says that the lawsuit is “inconsistent with the law, the facts and the reality of the marketplace.” In an effort to avoid the government’s ire, Anheuser Busch has offered to sell Modelo’s 50 percent stake in the distributor that imports Corona in the U.S. The company argues that this will ensure that the prices of Corona and AB’s other beers will be determined separately.

This lawsuit is the latest in a string of prominent antitrust cases coming from both the DOJ and international regulators. In 2011, for instance, the DOJ blocked AT&T Inc.’s acquisition of T-Mobile USA, while European regulators prevented a proposed merger of the Deutsche Borse AG and NYSE Euronext exchanges last year.

The current case pits current DOJ attorneys against former agency staffers, as the Wall Street Journal points out. Group Modelo has entrusted its antitrust matters to Christine Varney, who led the DOJ’s antitrust division for two years. On the other side is Steve Sunshine—currently representing AB InBev as head of North American antitrust and competition at Skadden, Arps, Slate, Meagher & Flom—who served as deputy assistant attorney general in charge of merger and enforcement at the DOJ.

Read more at the Wall Street Journal.

For more InsideCounsel coverage of antitrust lawsuits, see:

Dairy co-cop will pay $158.6 million in antitrust settlement

DOJ antitrust division collects record-breaking fines in 2012

Retailers appeal $7.2 billion Visa/MasterCard settlement

Former antitrust chief joins Simpson Thacher

Private antitrust suits up in 2012

Alanna Byrne

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