Antitrust watchdog to investigate AB-InBev’s competitive edge

Regulators are having a busy time looking into allegations that brewer AB-InBev is limiting competition from craft brewers by buying distributors, media reported on 12 October 2015.

In the past few months, the world’s number one brewer has shocked the craft beer industry when it struck deals for five distributors in three U.S. states. Because of the Three Tier System, many U.S. states require brewers to use distributors to sell their product. Once AB-InBev buys a distributor, craft brewers say they find that they cannot distribute their beer as easily and sales growth stalls.

Media say that AB-InBev is already the second-largest distributor in the country behind the Reyes Beverage Group, self-distributing over 100 million cases beer (8.5 million hl) or 10 percent of its volume. For the rest, AB-InBev relies on a network of over 500 distributors.

Antitrust regulators are also reviewing craft brewers’ claims that AB-InBev uses its muscle to push some independent distributors to only carry the company’s products. AB-InBev’s purchase of several craft brewers in recent years means that it is now in a position to offer a greater variety of products itself.

The Justice Department’s review comes at an awkward time for AB-InBev as it needs to get the U.S. watchdog’s approval of its takeover of SABMiller.

AB-InBev is widely expected to sell SABMiller’s stake in its U.S. joint venture MillerCoors to appease regulators, leaving its U.S. market share unchanged at 46 percent.

State regulators in California, where AB-InBev announced distributor purchases in Oakland and San Jose in September, are also looking into the matter, it was reported. It is not clear if state regulators are looking into the recent purchases of two distributors in Colorado and one in New York as well.

AB-InBev confirmed that it was talking to regulators.

There were some 4,000 craft brewers as of September this year.