With the Super Bowl coming up this weekend, football fans across Colorado are stocking up on the essentials for watching the big game: snacks and beer. One thing that consumers may not be aware of is the pricing and business dispute that is going on back at the beverage headquarters of Anheuser-Busch InBev and Grupo Modelo. Depending on the outcome of a potential merger between the two companies, shoppers may end up paying a little more for these game essentials in the coming years.
According to reports, Anheuser-Busch InBev (ABI) is looking to purchase Mexican brewing company Grupo Modelo, who makes popular beers like Corona. If this transaction were to go through, the Justice Department is concerned that it will likely lead to an increase in beer prices nationwide.
Currently, ABI is the largest brewer in the country and puts out the best-selling beer in the United States, Bud Light. If ABI merges with Grupo Modelo, who distributes the best-selling imported beer in the country, they would control about 46 percent of beer sales in the U.S. This is significantly more than the 29 percent that the second-leading beer company, MillerCoors, accounts for.
Based on these numbers, the Justice Department stepped in and filed a lawsuit to prevent the merger. According to the government, this transaction would give too much control of pricing to the new entity. As it stands, ABI is generally assumed to be the price leader in the beer industry, while other brewers typically price their products to be competitive with ABI beers. Grupo Modelo, however, has stuck to their own formula for competitive pricing which has effectively put pressure on ABI, and therefore other companies, to maintain or lower prices.
Reacting to the lawsuit filed by the Justice Department, ABI stated that they were ready to fight for the transaction in court.
Source: The Huffington Post, “Anheuser-Busch-Grupo Modelo Merger Challenged By Justice Department,” Pete Yost, Jan. 31, 2013
- Disputes commonly arise during the types of business transactions discussed in this post. For more information on how our Denver law firm can help Colorado businesses in similar situations, please visit our page on mergers and acquisitions.