Consumer lawsuit could delay AB–InBev’s takeover of Modelo
The name “Joseph Alioto” is probably mud at AB–InBev, or unprintably worse. Mr Alioto is a San Francisco antitrust attorney who on 22 March 2013 filed a private antitrust lawsuit in California on behalf of nine consumers, thus hoping to prevent AB–InBev’s USD 20.1 billion takeover of Grupo Modelo.
Mr Alioto is not an unkown at AB–InBev. In 2008 already he filed a lawsuit seeking to block InBev’s purchase of Anheuser–Busch, but to no avail.
Nevertheless, AB–InBev seem to take this lawsuit seriously as it could throw a spanner in their works. On 25 March 2013 AB–InBev said in a regulatory filing: “Even if we, Grupo Modelo, Constellation and Crown Imports resolve the litigation with the Department of Justice, the court in this private action could enjoin the parties from completing the combination with Grupo Modelo, or could further delay it.” AB–InBev added: “We intend to defend against it vigorously.”
Whatever AB–InBev’s lawyers think of this lawsuit in private – whether it will get Mr Alioto and his clients anywhere or not – a suit is a suit and hence it poses a business risk. Therefore, shareholders had to be told in the regulatory filing.
Mr Alioto’s clients are an interesting bunch of people according to the writ which can be found on the internet. Although they claim to be “consumers” and subsequently would be affected by price hikes if AB–InBev, Constellation, Crown and Modelo had their way, several of them seem to be lawyers themselves. Considering that top U.S. lawyers can charge up to USD 900 per hour, I fail to understand why they worry about AB–InBev’s or Modelo’s beers becoming more expensive while there are so many affordable craft beers out there.
Perhaps they are merely concerned citizens who put their money where their mouths are? Their lawsuit alleges that the Modelo acquisition by AB–InBev will substantially lessen competition and create a monopoly in the production, distribution and sale of beer in the United States.
Why the lawsuit was submitted only now and not sooner also remains a puzzle. Unless, of course, it seeks to add to the high drama that the takeover has already turned into and ultimately hopes to foil AB–InBev’s et al.’s attempt to reach a settlement with the U.S. Department of Justice (DOJ).
Following the DOJ’s decision to take AB–InBev to court over the Modelo deal in January this year, a judge had granted AB–InBev and the DOJ until 9 April 2013 to either settle or create a schedule for the court to hear the antitrust dispute.
Whether justice will be done in the end – who knows? That’s why there isn’t for nothing the German proverb “on the high seas and in court, you are in God’s hands.”
