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Court Finds Beer Drinkers’ Antitrust Claims Against Anheuser-Busch InBev Are Flat

Posted  September 23, 2013

Anheuser-Busch InBev (AB InBev), the world’s largest brewery, has convinced a federal judge in California to dismiss an antitrust complaint challenging its acquisition of Grupo Modelo, the largest brewer in Mexico.

The plaintiffs in Steven Edstrom et al. v. Anheuser-Busch InBev SA/NV are a group of nine beer consumers in the United States who are asking the U.S. District Court for the Northern District of California to block AB InBev’s acquisition of Grupo Modelo on the ground that “there is a significant threat” that AB InBev would fix prices in the United States following the acquisition.

Although AB InBev agreed to sell Grupo Modelo’s U.S. assets to settle an antitrust suit brought by the U.S. Department of Justice (the “DOJ”), the beer consumers alleged that Constellation Brands Inc., the purchaser of those assets ,would act as AB InBev’s “puppet.”

Judge Maxine Chesney ruled that “the second amended complaint, however, lacked any factual allegations supporting a claim, and relies, instead solely on conclusory allegations.”

In 2012, AB InBev, which had owned 50 percent of Grupo Modelo, agreed to purchase the other 50 percent equity interest from Grupo Modelo’s other owners.  The DOJ blocked this merger because taking Modelo out of the competitive landscape would allegedly make it easier for other companies to act in coordinated leader-follower pricing strategies in the future.  AB InBev settled that suit by agreeing that it would sell Grupo Modelo’s U.S. assets to Constellation, which would also be given perpetual rights to Grupo Modelo’s brands.

Despite the settlement of the DOJ action, the beer consumers in the Steven Edstrom action alleged that Constellation would be controlled by AB InBev, which would lead to price fixing. The court found these allegations unconvincing, however, because the plaintiffs failed to show how the firewall provisions – which limited the companies’ access to each other’s confidential pricing information – were not adequate to prevent any price coordination.

The court dismissed plaintiffs’ antitrust claims under the federal Clayton, Sherman and Tunney Acts, as well as claims under unspecified state laws.

The court granted plaintiffs leave to file an amended complaint no later than October 11, 2013.

Tagged in: Antitrust Litigation,