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Constellation, Crown want in on U.S. antitrust beer suit
February 8, 2013 / 8:07 PM / 5 years ago

Constellation, Crown want in on U.S. antitrust beer suit

(Reuters) - Constellation Brands Inc (STZ.N) and U.S. beer distributor Crown Imports filed a court motion asking to be joined as defendants in the U.S. government’s complaint against Anheuser-Busch InBev’s (ABI.BR) proposed takeover of Grupo Modelo GMODELOC.MX.

The Motion to Intervene, filed in U.S. District Court for the District of Columbia, and made public on Friday, seeks to allow Constellation and Crown direct access to the legal proceedings as neither company was named in the complaint, but each is directly affected by its outcome.

AB InBev, the world’s biggest brewer, filed a memorandum in support of the motion. Mexico’s Grupo Modelo joined in the filing.

On January 31, the U.S. Department of Justice sued to stop AB InBev from buying the half of Modelo that it does not already own, saying the $20.1 billion deal could mean higher U.S. beer prices.

The antitrust suit calls into question the future of one of the biggest deals of 2012, which would add beers like Corona Extra and Modelo Especial to a giant portfolio that already includes Budweiser, Beck’s and Stella Artois.

In a separate but related transaction, Constellation would acquire Modelo’s half of Crown for $1.85 billion, giving Constellation, mostly a wine company, full control of selling Modelo beers in the United States.

AB InBev said its memorandum explains that the proper legal standard for the DOJ’s case requires evaluation of the net effect of the two transactions. The companies say the net effect is “a more effective and competitive Crown”.

    Constellation, whose brands include Robert Mondavi, Kim Crawford and Inniskillin wines, said in a statement that Crown will compete more effectively in the future due to more favorable supply terms.

    Through a revised supply agreement, Crown is protected from interference from its supplier, Constellation said, noting that the cost of beer purchased is based on a formula that adjusts annually at a rate below the U.S. Consumer Price Index.

    The case is: U.S. v. Anheuser-Busch InBEV SA/NV et al, U.S. District Court, District of Columbia, No. 13-00127.

    Additional reporting by Jonathan Stempel; Editing by Steve Orlofsky, Jim Marshall and Leslie Gevirtz

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