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AB InBev to contest merger lawsuit

Jan. 31, 2013 at 3:55 PM   |   Comments

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WASHINGTON, Jan. 31 (UPI) -- Beverage giant AB InBev said Thursday it would contest the U.S. Justice Department's lawsuit that aims to block the completion of a merger with Grupo Modelo.

In a terse statement, AB InBev, the multinational conglomerate that includes the former Anheuser-Busch brewer, said the department's proposal to block the merger "is inconsistent with the law, the facts and the reality of the market place."

"We remain confident in our position, and we intend to vigorously contest the DOJ's action in federal court," the company said.

AB InBev noted that its previous expectation of completing the merger in the first quarter was no longer likely.

In a complaint filed Thursday, that spells out its fears that the merger would create one company with too much control of the marketplace, the Justice Department said, "The U.S. beer industry – which serves tens of millions of consumers at all levels of income – is highly concentrated with just two firms accounting for approximately 65 percent of all sales nationwide."

As it stands, Anheuser-Busch controls 39 percent of the U.S. market, while MillerCoors controls 26 percent, the department said. Modelo, based in Mexico, controls 7 percent and Heineken USA Inc. controls 6 percent. The remaining 22 percent is controlled by a variety of smaller brewers.

Already, AB InBev sets the pace for market prices, the complaint filed in U.S. federal court in Washington said.

As it is, AB InBev "typically initiates annual price increases in various markets with the expectation that MillerCoors' prices will follow. And they frequently do," the complaint says.

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