The Department of Justice’s antitrust division will approve a major acquisition in the beer industry, but only if one of the merging companies divests its stakes in Kona Brewing Co., a leading Hawaiian brand. Without the divestiture, the deal would hurt the competitive characteristics of the beer market that serves the island state, according to the government.
See the previous post by MoginRubin lawyer Timothy Z. LaComb titled Anheuser-Busch InBev acquires Craft Brew Alliance.
If approved, this would pave the way for Anheuser-Busch InBev SA / NV (ABI) and its wholly-owned subsidiary Anheuser-Busch Companies LLC (AB Companies) to acquire Craft Brew Alliance Inc. for $ 220 million. AB already owns a minority stake in CBA. The department has approved PV Brewing Partners, LLC as the acquirer of Kona.
As is standard proceeding, the antitrust division filed a lawsuit, this time in U.S. District Court for the Eastern District of Missouri, to block the transaction, simultaneously proposing settlement. Court approval would resolve the alleged competitive prejudice, according to the government.
According to the department’s complaint, the acquisition of CBA by AB Companies would likely significantly reduce direct competition in Hawaii between ABI brands, such as Stella Artois and Michelob Ultra, and CBA’s Kona brand. If the transaction were cleared, ABI and CBA would have a combined share of approximately 41 percent in the moderately concentrated Hawaii beer market. The merger would also likely hurt future competition between ABI and CBA as, in the absence of the merger, the companies would continue to invest and compete for premium beer sales in the state. By eliminating CBA’s Kona brand as a competitive restriction, ABI would also likely have a greater ability to facilitate price coordination, which would result in higher prices for beer sold in Hawaii, amplifying competitive concerns.
“This merger, as originally structured, would have significantly increased market concentration in Hawaii and eliminated growing competition between the ABI and CBA brands,” said Deputy Attorney General Makan Delrahim of the Antitrust Division of the Department of Justice. “Today’s settlement with its divestitures will ensure that consumers continue to benefit from this competition today and into the future. “
© MoginRubin LLPRevue nationale de droit, volume X, number 273