In a letter to the Department of Justice, the American Antitrust Institute (AAI) has expressed competitive concerns raised by the proposed merger of beer giant AB InBev and rival SABMiller.
The letter makes the case for why a remedy — if the Department does not move to block the merger — should not only restore competition but also enhance consumer welfare.
“An AB InBev-SABMiller combination raises serious competitive concerns in the U.S. beer market,” said AAI President Diana Moss. “A deal of this magnitude, in a market that has already produced higher prices for consumers from previous consolidation, is red flag for enforcers.”
Moss said that the starting point for the Department is an analysis of the competitive effects of the AB InBev-SABMiller deal.
“Only then can the Department evaluate whether the proposed divestiture of SABMiller’s assets in the MillerCoors JV to Molson Coors will be an effective remedy,” she said.
“The bar is a high one,” Moss said. “Combining AB InBev and SABMiller will exacerbate incentives to raise prices, lower quality, slow innovation, and exclude rival craft brewers. The Department of Justice will not simply assume that changing the name on the door from Miller Coors to Molson Coors will neutralize the likely anticompetitive and anti-consumer effects of the merger.”
AAI’s analysis highlights the possibility that a post-merger Molson Coors may be a very different competitor after the loss of SABMiller.
Together with recent moves by AB InBev to integrate further into distribution and to exercise greater control over independent distribution, the deal raises concerns that it would be difficult to “fix.”
Given this complicated landscape, Moss emphasized that a remedy would need to fully restore competition and enhance consumer welfare at the same time.
“Any discussion of what makes for an effective remedy would include whether the SABMiller assets go to Molson Coors or to another market player,” said Moss.
If the assets are divested to Molson Coors, there is a need for a strong set of remedial conditions, Moss said.
They would, at a minimum, create an independent market entity in Molson Coors, prohibit acquisitions by AB InBev and Molson Coors, and take effective steps to preserve an open and independent distribution channel.