The U.S. Department of Justice is investigating whether Anheuser-Busch InBev’s incentive program to independent distributors violates the federal antitrust laws, according to a report by Reuters. The investigation apparently stems from the DOJ’s current antitrust review of AB InBev’s proposed $100 billion acquisition of global rival SABMiller PLC.
According to the article, under AB InBev’s incentive program, independent distributors aligned with the company are required to spend a certain amount each year to advertise AB InBev beers. If AB InBev beers make up 98 percent of the distributor’s sales, then AB InBev refunds 75 percent of this money. The flip-side of this incentive program is that the greater share of rival beers in a distributor’s sales, the smaller refund it receives. A distributor could even raise its sales of AB InBev beers, but receive less of a refund if its independent craft beer sales rose faster.
In light of AB InBev’s market position, the incentive program could have the effect of suppressing craft beer sales rather than boosting AB InBev sales, implicating the federal antitrust laws. In the past, the government enforcement agencies have been reluctant to use the merger review process to address other potential anti-competitive conduct. Thus it remains to be seen whether the DOJ will file suit and what effect, if any, this investigation will have on the impending merger. Market participants, such as brewers, distributors or consumers, on the other hand, are free to pursue their own actions and to seek full monetary recourse as well as conduct restrictions. This incentive program appears to have certain similarities to those that our firm has successfully challenged in other industries.
THE MOGIN LAW FIRM, P.C. specializes in representing businesses, entrepreneurs, consumers and investors in antitrust, unfair competition and complex business litigation. We have participated in some of the largest antitrust cases in the United States and are frequently requested by other law firms and often consult with law firms engaged in antitrust cases.
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