A-B & SABMiller Merger Faces Senate Scrutiny

WASHINGTON, D.C. — The proposed merger between Anheuser-Busch InBev and SABMiller plc has fallen under the microscope of the U.S. Senate Judiciary Committee.

The committee's Subcommittee on Antitrust Competition Policy and Consumer Rights brought together interested parties on Tuesday to discuss the pending $107-billion transaction, according to The Hill.

The deal, which is expected to close in the second half of 2016, would form the world's largest brewer. The post-merger company does not yet have a name. 

Providing testimony at the hearing were Carlos Brito, CEO of A-B InBev; Bob Pease, CEO of the Brewers Association; Craig Purser, president and CEO of the National Beer Wholesalers Association; J. Wilson, minister of Iowa Beer at the Iowa Brewers Guild; Diana Moss, president of the American Antitrust Institute; and Mark Hunter, president and CEO of Molson Coors.

"Wholesalers make decisions everyday on what brands to put on their trucks," said Sen. Amy Klobuchar (D-Minn.), the committee's ranking member. "I want to make sure consumer choice, not producer power, drives that decision."

Brito told the senators that the main goal of the transaction is to expand A-B InBev brands to Africa, Asia and parts of Latin America. "This transaction is really about the rest of the world," he said, later adding that because of that, there will be no effect on the way the company conducts its business in the United States.

However, Purser voiced concerns that A-B InBev will distribute more of its own beer as a result of the merger and terminate its relationship with the independent distributors that are now free to choose which brands to distribute.

In response to Sen. Richard Blumenthal's (D-Conn.) questioning about A-B InBev's ownership of distribution, Brito said he could commit to keeping distribution around 10 percent. The beer company's current distribution is between 7 percent and 8 percent, he cited.

As CSNews Online previously reported, SABMiller will sell its 58-percent stake in a venture with Molson Coors for $12 billion to ease antitrust concerns. This sale includes global rights to the Miller brand name and gives Molson Coors full control of operations. Molson Coors will also have the rights to other brands sold in the United States including Redd's, Peroni and Pilsner Urquell.

The sale also includes the global Miller brand, currently sold in more than 25 countries — including Canada, Colombia, Czech Republic, Ecuador, Mexico, Panama, Romania, Russia, South Africa and the United Kingdom — as well as related trademarks and other intellectual property rights.

A-B will also need to address regulatory issues in China, where SABMiller holds a 49-percent stake in the Chinese beer Snow.

According to The Associated Press, Brito said by selling the popular Miller brand to Molson Coors, the deal ensures Anheuser Busch InBev's market share in the United States will not change. "If anything, this deal will create an even more competitive landscape in the U.S. by creating a stronger competitor in Molson Coors," he said.

The U.S. beer industry is more competitive than ever with the strong growth of craft beer and increased competition from wine and liquor, Brito added.

In the U.S., craft beers account for about 11 percent of beer sales, compared to about 1 percent 25 years ago, the AP reported.

Still, Moss of the American Antitrust Institute said the proposed merger could raise beer prices for consumers and reduce choice and diversity in the marketplace. She suggested a number of conditions that could be imposed on the new mega-brewer, including restrictions on how it distributes beer to wholesalers and retailers, according to the news outlet.

Klobuchar, the subcommittee's ranking Democrat, agreed. While she does not oppose the merger, "it seems like there should be some conditions to protect this growing industry, which is all about U.S. jobs," Klobuchar said.