Anheuser-Busch InBev NV (ABI) seeks dismissal of a private antitrust lawsuit alleging its $20 billion acquisition of Grupo Modelo SAB will lead to higher beer prices, while nine customers who filed the lawsuit asked a judge to postpone the deal.
Budweiser-maker AB InBev, the world’s largest beer company, agreed as part of the merger for winemaker Constellation Brands Inc. (STZ:US) to buy the stake that Modelo holds in their joint U.S. distribution venture for $1.85 billion. AB InBev called the customers’ claims that the deal will allow it to control Constellation and conspire to raise beer prices “outlandish and completely unsupportable.” Constellation also asked a judge to dismiss the lawsuit.
AB InBev made binding commitments in the U.S. Justice Department-supported transaction to turn Constellation into a competing brewer that will produce and control all of Mexico City-based Modelo’s brands in the U.S., including Corona, the country’s biggest import, AB InBev said in filings yesterday in federal court in San Francisco.
The antitrust complaint “should be seen for what it is: the latest in a line of shakedown attempts by plaintiff’s counsel premised on baseless assertions of fact,” said Allen Ruby, AB InBev’s attorney.
Attorney Joseph Alioto, representing beer consumers in the antitrust lawsuit, said Constellation has been inclined to follow AB InBev’s price increases before the deal, and AB InBev will be running the brewery and supplying the beer production during the first three years of the transaction.
He asked U.S. District Judge Maxine Chesney to issue a temporary restraining order blocking the companies from completing the transaction today and make them show why the deal shouldn’t be put on hold while the lawsuit proceeds.
“The new Constellation is under-capitalized and highly leveraged, having incurred billions of dollars in additional debt in order to make the acquisition,” Alioto said in a court filing yesterday. “As such it will be in no position to maintain lower prices in the face of ABI constant pressure to increase prices.”
The acquisition was completed as scheduled this morning, so the temporary restraining order request is moot, Ruby said in a filing today.
The U.S. said its agreement with Leuven, Belgium-based AB InBev to turn Victor, New York-based Constellation into a competing brewer could save beer drinkers almost $1 billion a year because of lower prices.
Alioto has sued to block other deals, including the one that created United Continental Holdings Inc. and the merger of Southwest Airlines Co. (LUV:US) and AirTran Holdings Inc.
The case is Edstrom v. Anheuser-Busch InBev NV, 13-cv-01309, U.S. District Court, Northern District of California (San Francisco).
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