Justice Department blesses marriage of two beer giants

The Washington Post

WASHINGTON — The Justice Department on Wednesday cleared the $100 billion merger of the world’s largest beer makers, Anheuser-Busch InBev and SABMiller, in a deal that would create a global giant controling much of the world’s brew.

U.S. antitrust officials spent more than a year studying the deal, concerned the combined new company would have too much market power and drive up prices. But the companies agreed to take several steps to address those concerns, including SABMiller divesting its entire U.S. business and give up worldwide Miller beer brand rights. As a result, the competitive landscape in the U.S. will remain the same, according to the Justice Department.

“The remedy we secured will help preserve and promote competition in the multi-billion dollar U.S. beer industry,” said Sonia Pfaffenroth, deputy assistant attorney general.

Still, the merger puts some of the country’s most popular beers under one roof: Anheuser-Busch InBev’s Budweiser and Corona and SABMiller’s Peroni. Anheuser-Busch InBev’s Bud Light alone accounts for one in every five beers sold in the United States.

Anheuser-Busch InBev, which is based in Belgium and SABMiller, which is based in London, have held the number one and number two spots in the beer market for at least a decade, according to data from Euromonitor. The companies currently control 70 percent of the U.S. beer market and 30 percent of the global market, according to the research group.

But global beer sales have started to slow and traditional beer markers are facing more competition from smaller craft brewers.

The merger could give the combined company the leverage to enter new markets, including in Africa and Latin America. The combination will also allow the companies to save money on ingredients, packaging, distribution and the many other expenses that come with running a worldwide enterprise. Perhaps, more importantly, the takeover could put the new company in a better position to combat the rise of smaller craft brewers.

The beer companies have been seeking regulatory approval across the world, from Canada and Australia to Ukraine and Mexico. But U.S. regulators were expected to be the toughest arbiters.

In a statement, SABMiller said in the jurisdictions where regulators are still mulling the combination the companies “will continue to engage proactively with the relevant authorities to address their concerns in order to obtain the necessary clearances as quickly as possible.”

This comes at a time when the Justice Department and Federal Trade Commission, which share responsibility for antitrust cases, have become more aggressive at enforcing antitrust rules.