Market Overview

Constellation Brands, Crown Imports File Legal Motion to Defend Interests in DoJ Action Against AB InBev, Modelo


Constellation Brands, Inc. (NYSE: STZ) and Crown Imports (Crown) filed a Motion to Intervene in U.S. District Court for the District of Columbia today to ensure the companies interests are represented as part of the U.S. Department of Justice's (DOJ) complaint against the proposed Anheuser-Busch InBev (AB InBev) acquisition of Grupo Modelo (Modelo). Constellation has a separate proposed transaction with AB InBev to fully acquire Crown, currently a 50/50 joint venture with Modelo. Constellation and Crown were not named as part of the Jan. 31, 2013 DOJ complaint; however, the complaint directly impacts both companies. This motion will seek to permit Constellation and Crown to have direct access to the legal proceedings.

As part of the motion to intervene, Constellation continues to affirm a number of key points, including:

* The transactions are good for beer consumers as Crown will be a stronger competitor in the U.S. The proposed transactions will enhance Crown's status as an independent and competitive entity and will strengthen Crown's position as a growing competitor to AB InBev in the U.S. beer market. Crown will be 100 percent owned by Constellation and will have complete, autonomous control as the brand owner with respect to its distribution, marketing, promotion and pricing of the Modelo brands in the U.S.  AB InBev will not be selling Corona or the Modelo brands in the U.S., and will have no influence over Crown. 

* The transactions will improve competition in the U.S. beer industry.  Crown is the third largest beer company in the U.S. with a strong portfolio of well-known brands.  Crown is guaranteed supply of a certain number of new products each year upon request. The transactions do not increase concentration in the U.S. beer market. Crown, which prices, markets and distributes Corona and the Modelo portfolio in the U.S., will be completely independent after the transactions. Thus, competition will increase as AB InBev will have no economic interest in Crown's business. 

* Constellation Brands and Crown will compete in the future even more effectively due to more favorable supply terms than previously existed. Through a revised supply agreement, Crown is protected from interference from its supplier and the cost of beer purchased is based on a formula that adjusts annually at a rate below the U.S. Consumer Price Index.

Posted-In: News Legal


Related Articles (STZ)

View Comments and Join the Discussion!

So David Einhorn is the Dumb Money on Apple

EUR Longs Reload For LTRO Fallout