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Path cleared for beer giants to merge, here's how it could affect craft brewers

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The U.S. government has cleared the way for the world's two largest beer producers to merge.

The Department of Justice announced a proposed settlement Wednesday, which allows Belgian-based Anheuser-Busch InBev (ABI) to proceed with its acquisition of London-based SABMiller.

The proposed merger was met with concerns from lawmakers and America's craft brewers, who said it could stifle competition in the market and limit consumer choices, but in statements Wednesday, they said requirements outlined in the settlement – if enforced – address their apprehensions about the acquisition. (Read more on this below.)

With the Justice Department's approval, ABI only needs approval from regulators in China, as well as shareholders, to complete the $107 billion acquisition, the Wall Street Journal reports. Both are expected to be approved.

The deal is expected to close in the second half of 2016, according to a statement from ABI. The company says it is pleased with the settlement and now it can move forward to make the world's first "truly global brewer."

The requirements

One of the major concerns from craft brewers was the fact that ABI, which operates 19 breweries in the U.S. and owns more than 40 major beer brands in the country, is also one of the largest beer distributors in the U.S.

The worry was that the company's practices could prevent smaller breweries from getting a place on liquor store shelves or in bars, which in turn would limit consumer choices and competition in the industry.

Bob Pease, the president and CEO of the Brewers Association, says the not-for-profit trade group continues to believe the merger between the two companies is bad for the beer industry and consumers, but the Justice Department's "significant requirements ... appear to address some of our major apprehensions with the merger," according to a news release.

Among those requirements are ending distributor incentive programs, putting a cap on ABI's self-distribution volume, and "other measures to protect distributor independence," Pease said.

https://twitter.com/BrewersStats/status/755856702872752128

"Independent distributors that sell ABI’s beer will have the freedom to sell and promote the variety of beers that many Americans drink," Sonia Pfaffenroth, the deputy assistant attorney general of the Justice Department's Antitrust Division, said in a statement.

The settlement will also require a review of all future ABI craft beer acquisitions, the news release said, but does not limit the number of craft breweries ABI can acquire.

https://twitter.com/BeerInsights/status/755837115963936768

The settlement is 'encouraging'

U.S. Sen. Amy Klobuchar was among the lawmakers who asked the Department of Justice to "carefully consider" the proposed merger to make sure it didn't stifle competition or innovation.

In a statement to BringMeTheNews Wednesday, Klobuchar said, in part:

"I'm encouraged that today's announcement reflects the concerns I raised in letters and hearings over the past year. I will be vigilant to ensure that craft brewers have access to distribution channels and competition in the $100 billion-a-year beer industry remains on tap."

The Brewers Association, which represents 70 percent of the brewing industry, says it will continue to monitor how the merger affects the craft beer industry, and will encourage the Justice Department to take action against ABI if the company exhibits any anticompetitive behavior.

BringMeTheNews has also reached out to the Minnesota Craft Brewers Guild for comment on the settlement.

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