$20 billion beer merger back on track after anti-trust settlement

The U.S. Justice Department has reached a settlement with Anheuser-Busch and Grupo Modelo, paving the way for Budweiser’s brewer to acquire the maker of Corona.

The agency filed a lawsuit to block the $20.1 billion deal in January, saying it would reduce competition and potentially drive up costs for the drinking public.

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“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.”

Currently, Anheuser-Busch InBev and Grupo Modelo are the first and third largest brewers of beer sold in the United States.

Under the proposed settlement announced Friday, the companies would be required to divest Modelo’s entire U.S. business to Constellation Brands Inc. in order to move ahead with the merger. That would mean shedding licenses of Modelo brand beers, its most advanced brewery, its interest in Crown Imports LLC and other assets, according to the Justice Department.

The licenses to be transferred to Constellation include all seven brands that Modelo currently offers in the United States — Corona Extra, Corona Light, Modelo Especial, Negra Modelo, Modelo Light, Pacifico and Victoria. They also include three brands not yet offered in the United States, but currently sold by Modelo in Mexico – Pacifico Light, Barrilito and León.

Satisfied with the arrangement, the agency filed the proposed settlement in U.S. District Court for the District of Columbia, which also must sign off. The settlement will also be published in the Federal Register, and interested parties will have 60 days to weigh in before the court could enter final judgment.