Start 14-Day Trial Subscription

*No credit card required

Jim Dykstra's picture

ABInBev SAB Miller 'MegaBrew' Merger Approved

MegaBrew Beer Connoisseur

The US Department of Justice has announced it has reached a settlement with ABInBev, allowing it to move forward with its acquisition of SABMiller, joining the world's first and second largest brewers, respectively. Though the $107 billion merger will make MegaBrew a force of Godzilla-like proportions, ABI made significant concessions in order to keep the deal moving, with an expected closing date towards the end of 2016.

As expected, ABI will divest MillerCoors, and will reportedly do away with its proposed Voluntary Anheuser-Busch Incentive for Performance plan (VAIP), which was especially worrisome to smaller brewers who felt they couldn't compete with AB's resources. In the words of the DOJ, the agreement "prohibits ABI from instituting or continuing practices and programs that disincentivize distributors from selling and promoting the beers of ABI’s high-end and other rivals."

Further, the DOJ will require ABI to limit its ownership of independent wholesalers, which can be leveraged to squeeze smaller brewers out of markets. ABI has agreed to keep its distribution via wholly-owned distributors below 10 percent, which will further lessen the company's ability to monopolize territory.

While news of the merger is hardly exciting for craft brewers, the consensus seems to be that the DOJ did a decent job as a regulatory watchdog.

The Brewers Association's CEO Bob Pease said that the "DOJ’s significant requirements, including the termination of incentive programs such as the Voluntary Anheuser Busch Incentive for Performance Program (VAIP), a cap on ABI’s self-distribution volume and other measures to protect distributor independence, appear to address some of our major apprehensions with the merger."

We'll keep you posted as the merger develops. 

 

Comments

RAR's picture

What ever happened to the government that was suppose to be protecting the consumer from corporate monopolies, and after the 2008 financial debacle said it would no longer alow businesses from getting to Big to fail? WTF!