BY PAT SUMMERS

NEWJERSEYNEWSROOM.COM

Yesterday the Justice Department filed an antitrust suit against the proposed $20B purchase of Mexican brewer Grupo Modelo, maker of Corona, by Anheuser-Busch InBev, the international conglomerate that makes Budweiser and many other beers, the BizJournals.com  reports. The suit might prevent domestic beer prices from going up across the board.

The department’s move would call a halt to beer company mergers that have occurred essentially without challenge since 1980. Then, there were 48 major breweries; now there are two – Anheuser-Busch InBev (ABI), the country’s largest beer company, and MillerCoors, the second largest.

The proposed purchase of Modelo, the country’s most popular beer import, would substantially reduce competition and probably raise prices in the domestic beer market. While ABI, usually followed by Miller, has consistently raised beer prices, Grupo Modelo has resisted that trend, keeping prices low.

If bought by giant ABI, Modelo prices would probably rise too, the Justice Dept. argues in its suit.

“Combined with Mexico’s Grupo Modelo, America’s top three selling beer companies control about 75 percent of the market, according to the Justice Department,” reports Washington Times.com in an excellent detailed story. “By eliminating Grupo Modelo, Anheuser-Busch would control nearly half of the market, and have a share that is more than 50 percent larger than Miller.”

ABI promises a court fight against the suit to block its deal, according to Newser.com. In turn, an antitrust official describes Modelo’s comparatively low pricing as “a significant constraint” on the bigger companies’ pattern of price increases.

"What we saw was a pattern of behavior" in which the "big folks were working hard to get price increases and Modelo was a significant constraint" on that behavior, says a Justice Department antitrust official.

The Obama administration’s antitrust suit contrasts sharply with the consolidations that occurred in the $80B beer industry during George W. Bush’s eight year administration.

The Washington Times reports that the consolidations that created MillerCoors occurred during 2002 and 2008, while in 2008, InBev bought Anheuser-Busch to form the current company.