Sunday, April 21, 2013

Feds Save Beer Drinkers from the Possibility of Slightly Increased Prices

Feds Save Beer Drinkers from the Possibility of Slightly Increased Prices:
On Friday, the Department of Justice called off its antitrust
case against Anheuser-Busch InBev (ABI), which had been poised to
take over Grupo Modelo, the Mexico-based brewer of Corona. ABI will
still take over most of Modelo, but the rights to sell the
company’s brands in the U.S will be turned over to an independent
company, Constellation.
The move means instead of two massive brewers (ABI and
MillerCoors), a large brewer (Heineken), and over 2,000 small
brewers, the U.S. will now be served by two massive brewers, two
large brewers (Modelo—now Constellation—controls seven percent of
the U.S. market), and over 2,000 small brewers. According to the
DOJ, this is a big victory for competition.
From the DOJ’s press
release
:
As originally proposed, [the merger] would substantially lessen
competition in the market for beer.... The department alleged
that the transaction would result in consumers paying more for beer
and would limit innovation in the beer market.
“This is a win for the $80 billion U.S. beer market and
consumers," said Bill Baer, Assistant Attorney General in
charge of the Department of Justice's Antitrust Division. "If this
settlement makes just a one percent difference in prices, U.S.
consumers will save almost $1 billion a year."
Sources not close to the investigation contend, however, that
competition and innovation were not really in peril. These sources
are the multitudinous plethora of arrays of delicious beers
available pretty much freaking everywhere.
Of course, taxes account for about 45 percent of the
cost
of beer, so if the federal government was really
interested in saving consumers some coin they could always relax
the excise tax (which comes
to $7.00 on each of the first 60,000 barrels produced and $18 per
barrel after that). Or perhaps the DOJ could look into breaking up
state-level wholesaling cartels, which have a government-granted
stranglehold on supply chains.
Last month, Reason contributor Baylen Linnekin
covered
some of the regulatory challenges craft brewers
face. Sadly, lack of corporate welfare does not seem to be
one of those challenges. That story is over at
The New School
. H/T: Jacob Grier.