Ninth Circuit Upholds Dismissal Of Antitrust Suit Against The Anheuser-Busch InBev And SABMiller Merger
08/14/2018On August 8, 2018, the United States Court of Appeals for the Ninth Circuit upheld a dismissal of an antitrust class action by beer consumers that challenged the acquisition of SABMiller (“SAB”) by Anheuser-Busch InBev (“ABI”). In an opinion by Judge Margaret McKeown, the Ninth Circuit held that the beer consumers failed to state a claim under Section 7 of the Clayton Act because: (1) ABI did not actually acquire a competitor in the U.S. beer market; (2) ABI did not acquire a “potential competitor” in the U.S. beer market; and (3) the consumers’ concern that the acquisition would significantly increase the threat of post-merger coordination between the last remaining market players, ABI and Molson Coors Brewing Company (“Molson”), was speculative.
ABI is the United States’ largest producer and seller of beer, comprising roughly 46 percent of the national market. SAB is a multinational brewing company that operates in the United States exclusively through a joint venture with Molson. The SAB/Molson joint venture, MillerCoors, LLC (“MillerCoors”), is the nation’s second-largest producer and seller of beer, controlling roughly 25 percent of U.S. market share. In November 2015, ABI and SAB announced the terms of their multi-billion dollar acquisition of SAB by ABI. As a part of the transaction, SAB divested its interest in MillerCoors, making it a wholly-owned subsidiary of Molson.
On appeal, plaintiffs argued that the transaction eliminated SAB as an “actual . . . competitor in the United States.” In upholding the district court’s dismissal of the class action, Judge McKeown stated that “ABI’s acquisition of SAB did not create the reasonable probability of antitrust effects in the U.S. beer market because ABI did not acquire any business interests in the U.S. beer market.” As a result of the divesture of SAB’s interests in MillerCoors to Molson, the DOJ “ensured that the acquisition will not create ‘any increase in the concentration in the U.S. beer industry.’” Judge McKeown reasoned that case law relevant to Section 7 requires the removal of an “actual competitor from the relevant market.” Because MillerCoors still remained in existence under Molson’s, no competitor was actually removed from the U.S. market.
The Ninth Circuit also rejected plaintiffs’ alternative argument—that the acquisition would eliminate SAB as a potential competitor—as “doomed from the start.” By alleging that ABI and SAB were actual competitors, plaintiffs undermined their “assertion that the brewers were potential competitors.” SAB was not “poised on the edge of the market,” the court found, because SAB already entered the market through MillerCoors. Lastly, plaintiffs alleged that the transaction significantly increased the threat of Molson and ABI coordinating their distribution practices. However, the Court held that without more facts, plaintiffs’ allegation is a “classic” example of speculation. Accordingly, the Ninth Circuit affirmed the district court’s dismissal of the class action against the ABI/SAB merger.CATEGORIES: Clayton Act, § 7, Merger Control