The top two lawmakers on the Senate Judiciary Subcommittee on Antitrust plan to hold a hearing to examine Anheuser- Busch InBev’s planned $104.2 billion takeover of SABMiller PLC. It is the first indication of regulatory scrutiny facing the global beer deal in the U.S.
Sens. Mike Lee (R., Utah) and Amy Klobuchar (D., Minn.) said in a statement the hearing will review how the merger would affect competition and U.S. consumers. The hearing hasn’t been scheduled but is expected to be held before the end of the year.
“We want to know what the impact is on American consumers, how it affects small craft brewers to be able to get product to market and how would [AB InBev] ensure this wouldn’t have a major impact on price or market entry,” said Ms. Klobuchar. She added that the committee would likely call chief executives from AB InBev and other beer companies to testify.
AB InBev, which announced a deal in principle for SABMiller on Oct. 13, has until Oct. 28 to make a firm offer for its rival or ask for an extension from the U.K. Takeover Panel.
The deal for SABMiller would make the world’s largest beer company even bigger, giving it a 28.4% market share after divestitures—nearly three times the size of its closest rival, according to industry tracker Plato Logic. The company would control six of the world’s top beer brands and have a dominant presence in nearly every major market.
Only the Justice Department has antitrust oversight over the AB InBev-SABMiller deal in the U.S., but the Senate subcommittee hearing offers lawmakers a chance to put executives and experts in the beer industry on the stand to answer questions about the consequences of a combined AB InBev and SABMiller. Last month, the subcommittee called on CEOs of Aetna Inc. and Anthem Inc. to testify regarding their respective takeovers of health insurance competitors Humana Inc. and Cigna Corp.
AB InBev currently controls 45% of the U.S. beer market. To secure regulatory approval, the Brussels-based brewer of Budweiser and Stella Artois is expected to sell SABMiller’s stake in MillerCoors LLC, a U.S. joint venture with Molson Coors Brewing Co. MillerCoors has a roughly 25% market share and controls the nation’s No. 2 brand (Coors Light) and No. 4 brand (Miller Lite).
An AB InBev spokeswoman said last week the company plans to resolve any regulatory issues in the U.S. “promptly and proactively.” Ms. Klobuchar said the subcommittee can’t assume those divestitures will be made and is operating under the assumption that AB InBev would control 70% of the U.S. beer market as a result of the acquisition.
If AB InBev Chief Executive Carlos Brito is called to testify before the Senate Judiciary Subcommittee, it would be his first appearance. When InBev acquired Anheuser-Busch for $52 billion in 2008, there wasn’t a Senate hearing.
In addition to the U.S., AB InBev’s deal is expected to face antitrust scrutiny in China where SABMiller has a 23% market share through its joint-venture with government-backed China Resources Enterprise Ltd., the maker of Snow, the world’s biggest beer by volume. AB InBev has a 14% market share with Budweiser and local brands like Harbin.
Antitrust experts and industry analysts think Chinese authorities would be reluctant to allow a foreign company to control more than a third of the market and may require AB InBev to sell SABMiller’s business in China.
The company also could face political resistance in South Africa. Unions in South Africa last week called on the government to reject the deal, saying it would affect tax revenue and job security.
By Tripp Mickle
Source: Wall Street Journal
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