Lawmakers: Deal to create megabrewer could cause hangover

The panel will review how the merger of the world’s two biggest beer producers would affect competitors and consumers.

Democratic Sen. Chris Coons of DE says he’s concerned the merger could harm Delaware-based Dogfish Head, adding: “Nobody wants to take a seat at a bar and find out that their only options are Bud and Miller”.

Witnesses also raised concerns about items that the companies have argued are the deal’s potential benefits. “If you want to grow your business as a craft brewer, if you want to get your beer into a chain store, if you want to get your beer into the stadium, you need to use the Anheuser-Busch distributor [or] the Miller Coors distributor”, he said.

Anheuser-Busch InBev announced in November it would purchase SABMiller for $106 billion, bringing together the two largest beer producers in the world. He said AB InBev’s 45% share of the USA market wouldn’t change, and the deal would make Molson Coors a “stronger competitor”. He said the focus of the merger would be access to new markets in Asia and Latin America. The Budweiser maker hopes that the move would help it secure approval for the deal from the US Department of Justice.

Brito, Molson Coors Brewing CEO Mark Hunter and other industry officials are scheduled to testify today in Washington before a subcommittee of the Senate Judiciary Committee.

“These mega-mergers may have been good for shareholders, but not necessarily for beer drinkers”, Blumenthal said.

While legitimate antitrust concerns may exist with respect to AB InBev’s relationship with distributors, this hearing is first and foremost about its acquisition of SABMiller.

Brito’s comments were contradicted by Bob Pease, CEO of the Brewers Association, which represents the independent craft-beer industry. Last week, the Wall Street Journal reported that the brewer is offering distributors a $1.5 million annual incentive if 98 percent of the beers they sell are AB InBev brands. MillerCoors sought to cancel distributor agreements after its formation in 2008.

Sen. Amy Klobuchar, D-Minn., meets Anheuser-Busch InBev CEO Carlos Brito before the hearing.

“The hearing suggests that there is still significant concern about the combination, even with the proposed fixes,”said Andre Barlow, a partner at Doyle Barlow and Mazard Plc and former Justice Department antitrust lawyer, as quoted by Bloomberg”. Mr. Blumenthal fired back that it was up to Mr. Brito to determine if AB InBev would be willing to make that commitment.

He said a recent trend toward “mammoth beer behemoths” has “not been a happy one for consumers” and has led to higher prices.

Mr. Brito later defended the company’s distribution practices, saying the craft market had more than doubled in size despite AB InBev’s ownership of distributors in New York, Boston, San Diego and Denver.

The American beer market is a more than $100 billion business, and delivers a product that, in both its national brand and regional craft brew forms, holds a special place in American culture and hospitality.

Mr. Brito offered similar assurances regarding beer supplies.

“The U.S. market has never been so open”, he said.

Molson Coors owns 42 percent of the MillerCoors joint venture and SABMiller 58 percent. Dr. Diana Moss, president of the American Antitrust Institute, encouraged regulators to prohibit that because it could allow AB InBev to influence pricing in the U.S. “We’ve seen this movie before with the airlines, and it didn’t end well for consumers then”, he said.