A-B InBev, SABMiller Deal Likely to Face Antitrust Scrutiny

LONDON — Talk surrounding a possible merger between the world's top two brewers has turned to antitrust issues.

As CSNews Online reported Wednesday, Anheuser-Busch InBev has confirmed its interest in acquiring SABMiller plc. SABMiller's board of directors also confirmed that A-B InBev has informed it that it intends to make a proposal to acquire the beverage company. However, SABMIller has yet to receive a proposal.

However, any potential deal would face regulatory scrutiny.

As The Wall Street Journal reported, regulators are likely to seek major concessions from A-B InBev, particularly in the United States and China, to put the brakes on two brewers that together already produce nearly a third of the world's beer and span hundreds of brands including Budweiser, Corona and Peroni. 

An intricate web of corporate alliances at A-B InBev and SABMiller, including competing bottling operations for The Coca-Cola Co. and PepsiCo Inc., adds to the complexity of negotiations. In addition, The Altria Group Inc., the No. 1 tobacco manufacturer in the U.S., owns a 27-percent stake in SABMiller, the report added.

"A lot of different enforcers are going to want to look at this. You could have some surprises here and there," said Darren Tucker, an antitrust lawyer at Morgan Lewis & Bockius LLP.

Regulators may require divestitures in Latin America, where SABMiller has a 95.1-percent market share in Peru and A-B InBev has 4.1 percent, according to Euromonitor. Similarly, SABMiller controls 92 percent of the market in Ecuador and A-B InBev controls 7.7 percent, the WSJ reported. 

The U.S. may represent the biggest regulatory hurdle. A-B InBev has approximately 45-percent market share and SABMiller has 25 percent through its MillerCoors LLC joint venture with Denver-based Molson Coors Brewing Co. A-B InBev and MillerCoors also control the only two U.S. beer-distribution networks, according to the news outlet.

As a result, A-B InBev may have to sell SABMiller's 58-percent stake in MillerCoors, whose brands include Coors Light and Miller Lite. It might have to settle for a discount because Molson Coors has the right to boost its stake to 50 percent and name MillerCoors' chief executive if SABMiller is acquired, the WSJ reported.

 Molson Coors also has the right of first refusal for the remaining 50 percent.