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U.S. Government Sues to Stop A-B InBev Merger With Corona Maker

January 31, 2013

The U.S. Department of Justice is filing a lawsuit to stop Anheuser-Busch InBev's planned acquisition of Corona-maker Grupo Modelo of Mexico, delivering a potential blow to the growth plans of the world's largest brewer.

"The department is taking this action to stop a merger between major beer brewers because it would result in less competition and higher beer prices for American consumers," Bill Baer, Assistant Attorney General in charge of the Department of Justice's Antitrust Division, said in a statement. "If [AB-InBev] fully owned and controlled Modelo, [A-B InBev] would be able to increase beer prices to American consumers. This lawsuit seeks to prevent [A-B InBev] from eliminating Modelo as an important competitive force in the beer industry."

As part of the planned acquisition, which was announced last summer, Grupo Modelo intends to sell its 50% stake in Crown Imports, the U.S. importer of Corona, to Constellation Brands, Crown's other owner, for $1.85 billion. Under that arrangement, Crown would continue to control marketing, distribution and pricing decisions stateside for Corona, as well as the other Modelo beers in its stable including Corona Light, Modelo Especial, Pacifico, Negra Modelo and Victoria. As a result, ad agency relationships are likely to remain unchanged if the deal goes through. The shop for Corona Extra is Cramer-Krasselt, while Goodby Silverstein & Partners has Corona Light and the fast-growing Modelo Especial brand.

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