U.S. Blocks Deal Between Top Beer Distributors
Talk about a buzz kill.
The Justice Department has filed a lawsuit to block a merger between the first and third largest beer distributors.
The 27-page civil antitrust lawsuit , filed Thursday in the U.S. District Court for the District of Columbia, challenges Anheuser-Busch InBev's acquisition of Mexican brewer Grupo Modelo, which makes Corona Extra.
In a conference call with reporters, Bill Baer, assistant attorney general in charge of the justice department's Antitrust Division, said that the $20.1 billion deal "is a bad deal for American consumers" because retail prices of beer would rise if the $20.1 billion sale goes through.
Together, ABI , which sells 200 brands including Budweiser and Stella Artois, and Modelo control about 46 percent of annual beer sales in the United States. MillerCoors, the second largest beer firm, accounts for about 29 percent of nationwide sales, according to the Justice Department. Last year, national beer sales hovered around $80 billion.
Although the Belgium-based ABI has a 50 percent non-controlling stake in Grupo Modelo, in June 2012 ABI agreed to pay a 30 percent premium to Grupo Modelo's share price for the remainder of the shares. Combined, the new company would have annual sales of about $47 billion, and employ 150,000 workers in 24 countries.
"The loss of this head-to-head competition would enhance the ability of ABI to unilaterally raise the prices of the brands that it would own post-acquisition, and diminish ABI's incentive to innovate with respect to new brands, products and packing," according to the lawsuit.
ABI did not return phone calls from ABC News.