Justice Dept. OKs beer merger with slight hiccup

ByABC News
November 14, 2008, 7:48 PM

NEW YORK -- With InBev's Labatt and Anheuser-Busch's Budweiser and Bud Light brands all holding double digit share in Buffalo, Rochester and Syracuse, the Department of Justice said in its announcement that the deal would likely have led to higher prices for beer in those cities.

Labatt has volume of about 1.4 million barrels in the U.S. About 80% of the volume is sold in the upstate New York regions and in the northern regions of Midwest states such as Michigan and Ohio, says Paul Vukelic, president and chief operating officer of Try-It Distributing in Buffalo.

It's brewed at Labatt Brewing Company, an InBev subsidiary in Toronto and imported into the U.S. by InBev USA in Buffalo.

"This divesture will ensure that consumers will continue to benefit from the significant competition between the merging companies in upstate New York," said Deborah Garza, deputy assistant attorney general of the antitrust division.

The DOJ's antitrust division filed a civil lawsuit Friday in U.S. District Court in Washington to block the proposed deal. Simultaneously, the department filed a proposed settlement seeking the spinoff to resolve antitrust concerns. A 60-day comment period is in effect and sometime after that comment period a judge will make a decision about the settlement, which resolves DOJ's competitive concerns. The A-B purchase is not contingent upon a Labatt sale before the deal is expected to close within the next few weeks.

Anheuser-Busch and AmBev, the subsidiary of InBev that owns Labatt Brewing, said in separate statements Friday that the parties have satisfied the Justice Department's request to sell Labatt USA to a third-party licensee.

The companies did not name the licensee, or give terms of that deal. They said the specifics must be approved by the Justice Department.