Justice Department Tries to Block A-B’s Takeover of Modelo

WASHINGTON D.C. -- The U.S. Department of Justice (DOJ) today filed suit to block Anheuser-Busch InBev's $20 billion deal to purchase the 50 percent of Grupo Modelo it already didn't own, citing anticompetitive reasons.

According to the DOJ, if approved, the deal would further expand A-B InBev, the world's largest brewer, by allowing it to take control of Modelo's Corona Extra and Modelo Especial beer brands. The DOJ argued that the transaction would hurt competition and raise beer prices for consumers.

In addition, the DOJ stated A-B InBev -- parent of Budweiser -- and Modelo combined would control about 46 percent of the annual U.S. beer market. MillerCoors is second at 29 percent of nationwide sales.

"We believe the acquisition is a bad deal for American consumers," Bill Baer, assistant attorney general in charge of the DOJ's antitrust division, said on a conference call, reported Fox Business. "If you have a very slight price increase as a result of the deal, American consumers are going to pay as much as billions more."

However, A-B InBev responded in a news release issued this afternoon that the DOJ's lawsuit is "inconsistent with the law, the facts and the reality of the marketplace."

"We remain confident in our position, and we intend to vigorously contest the DOJ's action in federal court," read A-B InBev's statement. "… We will comment further once we have reviewed the DOJ filing."

The beer brewer added that due to the DOJ filing, it no longer expects the deal to close in the first quarter of 2013, as previously planned.