Navigate this market better. Subscribe for FREE stock alerts and information.

Wednesday, February 6, 2013

In beer antitrust case, U.S. puts successful theory to a new test, (NYSE: BUD)

In challenging beer company Anheuser-Busch InBev SA's proposed deal with Mexican brewer Grupo Modelo, the U.S. government is applying a powerful legal theory it has used to stop other mergers.The government alleges in a lawsuit filed in Washington, D.C., federal court that even though Modelo beers only account for 7 percent of the U.S. market, the company plays a critical, pro-competitive force in the market by not following the pricing of the two biggest players: AB InBev, which has 39 percent, and MillerCoors, a joint venture between SABMiller Plc and Molson Coors Brewing Co, which has 26 percent. Without Modelo, the government argues, the beer market will be subject to price coordination among the top players."The proposed merger would likely increase the ability of ABI and the remaining beer firms to coordinate by eliminating an independent Modelo - which has increasingly inhibited ABI's price leadership - from the market," government lawyers wrote in the complaint.The $20.1 billion deal would give AB InBev the half of Modelo it does not already own. AB InBev said the government's lawsuit is "inconsistent with the law, the facts and the reality of the market place."

Anheuser Busch Inbev SA is a brewing company. The Company produces, markets, distributes and sells a balanced portfolio of approximately 200 beer brands. Shares of BUD fell by 1.08% or $-0.95/share to $87.13. In the past year, the shares have traded as low as $64.00 and as high as $94.49. On average, 1211620 shares of BUD exchange hands on a given day and today's volume is recorded at 624762.