IUF logo.

Beerworkers Archive


Post date: 10/11/2012 - 22:18

AB-InBev and Corona Not quite Done Yet

While the Department of Justice is still in information-gathering mode, there are indications that it is preparing to litigate if negotiations to divest assets and/or restructure the relationship with Crown (to give it more autonomy) fail to bear fruit.

While the Department of Justice is still in information-gathering mode, there are indications that it is preparing to litigate if negotiations to divest assets and/or restructure the relationship with Crown (to give it more autonomy) fail to bear fruit.

One source told BBD last night that ABI is thought to be prepared to sacrifice the buy-back option with Constellation on Crown at the end of ten years, and/or put more concrete devices in place to ensure Crown's autonomy. The DOJ doesn't want to set a bad precedent for other companies. This is a unique situation, having a foreign brewery imported by another company and then you compete against yourself in a way. DOJ wants to make sure the appropriate Chinese walls are in place.

Still, if negotiations fail to appease a more aggressive DOJ Antitrust Division under the Obama Administration, ABI can either hope for an administration change before anything gets done, or it may get a lawsuit to block the sale. Now that the Verizon deal is done, the Division is said to be allocating the bulk of its resources behind the ABI - Modelo deal.

And as reported yesterday, the Division has engaged the craft brewers, not just on access to market issues, but it has also apparently listened to their stories of ABI's aggressive trade practices and category captaincy strategies. Craft brewers have long bridled at the tremendous sway A-B has, particularly with chains.

So the bottom line ? Nothing solid to report yet, but there are clouds apparently forming on the horizon if ABI is unable to convince the DOJ that passing off reins of Grupo Modelo products completely to Contellation-owned Crown Imports is enough to maintain industry balance and competitiveness.