By Reynolds Holding
NEW YORK, Jan 31 (Reuters Breakingviews) - The new U.S.
trustbuster has sprayed cold brew on Anheuser-Busch InBev.
William Baer, the Justice Department's antitrust chief, on
Thursday sued to stop the giant brewer's $20 billion purchase of
about 50 percent of Grupo Modelo. AB InBev had tried to allay
competition fears with the deal's structure.
The deal seemed a pretty safe bet when it was announced last
June. The maker of Budweiser and Stella Artois already owned
half of Modelo. The main benefits to AB InBev were supposed to
come from outside the United States. And it had a credible plan
to skirt U.S. antitrust worries by selling the Mexican brewer's
half-interest in its U.S. distributor and then continuing to
supply the distributor with Corona and other Modelo brands under
a long-term agreement.
But the DoJ reckons allowing AB InBev - the biggest producer
of beer sold in the American market - to control the distant
third-largest could squelch competition and boost prices. Among
other reasons, the department seems to think Modelo currently
behaves like an aggressive rival to AB InBev despite the larger
brewer's substantial, though not fully controlling, stake. With
the $80 billion U.S. market already highly concentrated, the DoJ
concluded the only solution was to try to block the deal.
The hefty drops in the market values of AB InBev, Modelo and
Constellation Brands, which owns the Modelo distributor, show
that the lawsuit came as a surprise to many. It could signal the
return of the strong antitrust policy promised when President
Barack Obama took office. His administration gunned down AT&T
and T-Mobile USA's merger and the joint bid by Nasdaq OMX and
IntercontinentalExchange for NYSE Euronext, but otherwise its
record looks remarkably tame. The DoJ, for instance, challenged
mergers, monopolies and the like in Obama's first two years only
about as often as its predecessor did, according to a Stanford
Law School study - although in fairness deal volume was also
lower in that period.
Baer was acting antitrust chief at the DoJ for most of last
year, and he was confirmed in the job only in December. Since
then, the Federal Trade Commission has ended its investigation
of Google. Despite a background that includes signs of
willingness to tweak rather than kill deals, Baer's move
suggests a thirst for tougher enforcement - or at least for a
tough-guy reputation. With AB InBev promising a vigorous
response, that may be tested.
(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own)
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