- U.S. Senate Judiciary panel looking at `beerhemoth' merger
- Combined entity would account for about half industry's profit
Anheuser-Busch InBev NV Chief Executive Offer Carlos Brito will try to ease concerns of U.S. lawmakers about the brewer’s proposed $110 billion acquisition of SAB Miller Plc, which would create an entity accounting for about half the industry’s profit and almost a third of all beer sold worldwide.
Brito, Molson Coors Brewing Co. CEO Mark Hunter and other industry officials are scheduled to testify Tuesday in Washington before a subcommittee of the Senate Judiciary Committee. The panel will review how the merger of the world’s two biggest beer producers would affect competitors and consumers. The combined company would hold the No. 1 or No. 2 positions in 24 of the world’s 30 largest beer markets.
“This hearing will provide an opportunity to publicly examine the impact of the so-called ‘beerhemoth’ merger on consumers and for the Antitrust Subcommittee to continue its oversight of potentially anti-competitive market consolidation,” Senator Mike Lee, a Utah Republican and chairman of the panel, said in a statement.
As part of the deal, AB InBev plans to sell SABMiller’s 58 percent stake in MillerCoors to joint-venture partner Molson Coors for $12 billion as it seeks to gain approval from the U.S. Justice Department. The Senate subcommittee has no power to block the merger.
“The hearing suggests that there is still significant concern about the combination, even with the proposed fixes,” said Andre Barlow, a partner at Doyle Barlow and Mazard Pllc in Washington and a former Justice Department antitrust lawyer.
The merger plan has drawn scrutiny from senators including Angus King, an independent of Maine, and Jeff Merkley, an Oregon Democrat, who wrote to the Justice Department with concerns that it could hurt the U.S. craft beer industry. Senator Ron Wyden, also an Oregon Democrat, wrote to the Federal Trade Commission with concerns over reports that AB InBev and its distributors may have acted to curb competition in markets including his home state of Oregon, where beer drinkers are suing to block the takeover.
“We look forward to the opportunity to discuss the highly competitive U.S. beer market and how this transaction will extend the reach of AB InBev’s iconic American brands, such as Budweiser, to markets outside of the U.S.,” AB InBev spokeswoman Marianne Amssoms said in a statement. Nothing in the transaction will change the strong growth of craft brewers, Amssoms said.
The Justice Department and the California attorney general are scrutinizing AB InBev’s plan to acquire two distributors in that state, which could potentially hurt craft brewers’ representation in liquor stores. Last week, the Wall Street Journal reported that the brewer is offering distributors a $1.5 million annual incentive if 98 percent of the beers they sell are AB InBev brands.
Andrew Holland, an analyst at Societe Generale, said Brito will tell lawmakers that there will be no change in the structure of the U.S. beer market.
“The bottom line is that AB InBev will not gain one iota of market share in the U.S. from the deal,” Holland said.