Not unlike Coke and Pepsi, two beer companies control most of America’s beer.
Who cares, you say? Apparently the federal government is mildly concerned, as reflected in its response to Budweiser’s plan to buy Corona, as discussed in a piece in today’s New York Times, as follows:
“Consumers will benefit from the Justice Department’s antitrust suit to block Anheuser-Busch InBev, the country’s largest brewing company, from acquiring one of its competitors. This kind of action was seen less frequently in the Bush administration.
“Anheuser-Busch InBev announced in June that it would pay $20.1 billion to buy the 50 percent stake in Grupo Modelo of Mexico — maker of Corona beer — that it did not already own. Together the two companies sell about 46 percent of all beer in the United States and more than 50 percent in big cities like Houston and Los Angeles, according to the department’s antitrust division. The proposed acquisition would leave the country with just two companies — the second being MillerCoors — controlling more than 70 percent of the beer business.
“Under the Bush administration’s less robust antitrust division, a series of big mergers severely reduced competition in the beer industry and led to higher prices. In 2008, it greenlighted two mega-deals: Belgium-based InBev’s purchase of Anheuser-Busch, and a merger of the American beer divisions of SABMiller, a London-based brewing giant, and Molson Coors, a Canadian company.
“Not surprisingly, beer prices started rising faster than the Consumer Price Index, according to a detailed study by the American Antitrust Institute, a research organization. The Obama administration has made a compelling case against InBev’s purchase of Grupo Modelo, the third-largest beer company in the country. In recent years, Modelo has competed with the two larger brewing companies by keeping prices of its top-selling beer, Corona, stable even as Anheuser-Busch raised the prices of its popular beers, like Bud Light. That has given customers an incentive to switch to Corona. That competition will most likely disappear if InBev is allowed to own 100 percent of Modelo, which currently operates independently.”