The U.S. government Thursday
intervened to stop a proposed merger between two foreign-owned beer
producers because it would raise the price for consumers and erode
The Justice Department filed a complaint in a federal court in Washington to quash the proposed alliance between Belgian-owned Anheuser-Busch InBev, which produces Bud Light, and Mexico's Modelo, which produces Corona.
Bud Light is the top selling domestic brand in the United States and Corona the biggest import.
AB InBev has proposed a 20-billion-dollar deal to take over the remaining 50 per cent of Modelo that it does not yet own. A combined operation would produce an estimated 47 billion dollars in revenues this year. The merger was part of a strategy to gain a larger foothold in developing economies.
"If ABI fully owned and controlled Modelo, ABI would be able to increase beer prices to American consumers," Bill Baer, the head of the department's antitrust division, said in a statement. "This suit seeks to prevent ABI from eliminating Modelo as an important competitive force in the beer industry."
AB InBev and Grupo Modelo issued statements that the deal was no longer expected to close in the first quarter of the year, Bloomberg news service reported.
AB InBev said the US government's action was "inconsistent with the law, the facts and the reality of the marketplace." The company said it would challenge the anti-trust complaint.
The Belgium company InBev NV bought the American company Anheuser Busch in 2008 for 52 billion dollars.
China, followed by the United States, is the world's biggest beer market by volume.
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