The DOJ recently announced that it filed a complaint challenging Anheuser-Busch InBev's (ABI) acquisition of Grupo Modelo. ABI, based in Belgium, produces the highest-selling beer in the US (Bud Light) and holds a 39% share of the US beer market. Modelo, based in Mexico, produces the popular Corona brand, among others, and holds a 7% share of the US beer market. ABI and Modelo are the first- and third-largest brewers of beer sold in the US and combined would hold a 46% share of all beer sales nationwide. The DOJ also analyzed the competitive effects of the deal in 26 US metropolitan areas.

Historically, and supported by ABI's own documents, ABI has led annual price increases in the US beer market by announcing its increases and assuming that the other brewers would act similarly. ABI's strategy was successful in relation to the second-largest beer brewer, MillerCoors, but did not motivate Modelo to increase its prices. Instead of following ABI's lead, Modelo, acting through its importer Crown, employed its own strategy of maintaining its prices in the hopes of narrowing the price gap between its own more expensive beers and those brewed by ABI and MillerCoors. Modelo hoped that by lowering the price difference between its beers and other brewers' lower-quality beers, it would encourage customers to trade up.

The DOJ asserts that Modelo's resistance to raising its prices has constrained ABI and MillerCoors' ability to raise their prices. Competition between the brewers has therefore increased throughout the country, particularly in California, Texas and other areas heavily populated by Latinos, leading ABI to decrease their prices in those areas.

While ABI currently holds a 43% voting interest in Modelo, it does not have effective control and instead still vigorously competes against Modelo. The DOJ alleges that allowing ABI to acquire the remainder of Modelo would likely harm consumers by:

The DOJ noted that ABI and Modelo presented a remedy to offset anticompetitive effects of the acquisition, but dismissed it as inadequate. In the proposed remedy, ABI would sell Modelo's 50% interest in its importer, Crown, to Constellation, which owns the other 50% of Crown, which would then possibly create competition between ABI and its wholly separate importer. ABI would also enter into a ten-year exclusive agreement to supply Constellation with Modelo beer for importation to the US. The DOJ argued that the proposal was insufficient because Constellation:

The DOJ requested that the acquisition be enjoined and that any plan by which ABI would acquire the remaining interest in Modelo be restrained.

This is one of the first merger enforcement actions taken by the DOJ with Bill Baer, Assistant Attorney General in charge of the DOJ's Antitrust Division, at the helm. The DOJ demonstrated its aggressive stance on merger enforcement by not accepting the parties' fix-it-first proposal. However, the DOJ must now litigate the competitive effects of both the original transaction and the proposed fix, which may put the agency at a disadvantage in court.

This case also serves as another example of the risk inherent in creating bad documents. In many instances, the DOJ relied on the parties own documents to show the high levels of competition between them and across various segments of the beer market.