Soon your Miller Lite will be brewed by a new company.
Last December, we wrote about a complaint filed by craft beer drinkers in an effort to block the merger between brewing titans Anheuser-Busch Inbev (ABI) and SABMiller. The post pointed out the unusual enforcement posture—private plaintiffs leapfrogging the federal antitrust enforcers and filing suit significantly prior to a decision by the Federal Trade Commission (FTC) or Department of Justice (DOJ). At that time we prognosticated, “a private plaintiff decrying a merger in court as illegal is left in an awkward position if the FTC or DOJ subsequently approves the deal.”
Well, interestingly, this scenario has popped up. On Wednesday, the DOJ announced that it is green-lighting the deal, albeit with significant divestitures from the merging brewers. The settlement requires, in part, the divestiture of MillerCoors in the U.S. and the rights to the Miller brand worldwide (in other words, recipes, trademarks, distribution). MillerCoors has a diverse portfolio of beer labels, ranging from the ubiquitous light beers, Miller Lite and Coors Light, to craft breweries such as Saint Archer and Terrapin (MillerCoors just announced that they are acquiring a majority interest in Terrapin).
The consumer suit to block the ABI/SABMiller deal pending in Oregon federal district court is now at a crossroads. The plaintiffs have requested a preliminary injunction and the court is simultaneously considering a motion to dismiss filed by the merging parties. First, it is important to note that the DOJ’s clearance does not necessarily preclude the 23 named plaintiffs from marching on with their suit. There is ample case law that the courts are not bound by the federal antitrust enforcers’ decisions. However, any plaintiff seeking a preliminary injunction must demonstrate that it is “likely to succeed on the merits.” Although the DOJ’s clearance is not conclusive, the district court certainly will take it into consideration. Also, the plaintiffs and their counsel must decide whether to continue funding the costly litigation if they manage to fend off dismissal. At this point, it is almost certain that the parties will litigate at least until the court issues a ruling on the pending motions. The outcome could potentially impact the timeline of the deal’s consummation and the costs to ABI/SABMiller.