Can Capitol Hill Crush a Beer Monopoly?
As the biggest beer distributors prepare to merge, lawmakers on the Hill are rushing to block it, fearing that a Big Beer monopoly could crush homegrown distributors.
A bipartisan group of lawmakers want to do keg stands on the grave of the proposed merger of Anheuser-Busch InBev and SABMiller, but there’s a problem: They’re struggling to find a tap.
“We’re going to stop it,” Rep. Peter DeFazio (D-OR) told The Daily Beast. But when pressed on the details of their strategy, the co-chair of the House Small Brewers Caucus was at a rare loss for words. “We haven’t figured that out yet.”
The proposed merger isn’t just turning heads on Capitol Hill. It’s causing nervous chatter in craft breweries and pubs across the nation, because allowing it go through could blunt the craft beer revolution being witnessed nationwide. SABMiller controls roughly 26 percent of U.S. beer sales, while AB InBev sells about 45 percent of the suds consumed at frat houses and football games, and everywhere in between.
If the two companies combine, they’ll control more than 70 percent of the U.S. beer market. AB InBev already owns Becks, Stella Artois, Bud Light Lime and Corona, among dozens of others. SABMiller ranges from Fosters to Keystone Light, and its portfolio includes Coors to Blue Moon. Globally the two sell about one in every three beers.
The new beer behemoth could jack up the cost of the frothy beverages we all love. While the mega breweries like Budweiser rip on craft breweries, they’ve also been buying them up at an astonishing rate, which means many craft beers are now actually AB InBev too.
AB InBev’s growing collection of distributors nationwide has also raised the investigative eye of the Justice Department. If the merger happens, local craft breweries fear distributors owned by the new beer giant would limit store shelves to their watery beers (think Budweiser, Coors, and Miller), the craft breweries they’ve already acquired (everything from Chicago’s Goose Island to a Seattle favorite, Elysian Brewing Company, and Bend, Oregon’s staple, 10 Barrel Brewing, among others), or to craft beers they quietly bought a stake in (like Redhook and Kona).
That’s why lawmakers are scrambling to blunt what many see as a marriage made in hell; at least for those of us not sitting in a corner office at AB InBev. The full details of the deal are expected to come out by Wednesday, and lawmakers are preparing to attack the proposal from all fronts.
Still, the final ruling comes down to the Department of Justice, which has lawmakers scratching their heads trying to figure out the best strategy to employ from the Capitol.
DeFazio is crafting a letter that he’ll ship around to his 182 member group of fellow craft-loving lawmakers. “We are going to express our concerns to the Justice Department about the anti-competitive nature of this potential merger, both on the supply side, in terms of who produces and distributes, you know, the beer, and also in terms of who might own the distributors,” DeFazio said.
Other lawmakers are taking a different tact. Congresswoman Chellie Pingree (D) is a member of the Small Brewers Caucus. And since her daughter is preparing to launch a new craft brewery in their home state of Maine, it’s safe to say she’s wearing her colors on her sleeve.
Over beers (of course), Pingree unleashed on the monopolistic feel of the proposal.
“It just seems like a really bad thing. And what’s the point? What’s the good in it?” Pingree said. “What’s the value to the consumer? And why do we have antitrust laws if it isn’t to prevent too big of a market share, fixing prices and all the things that can potentially happen when you own that much of a market?”
Pingree said she planned to derail the proposal by revving up her base with a petition. It’s been successful in the past. With the help of progressive groups, she got 162,137 signatures on a petition opposing the merger of Time Warner and Comcast. She also got 198,787 (!!!) people to help her “save the Monarch butterfly.” But can that strategy work on private beer conglomerates? She’s banking on it.
“It’s a good moment in time to sort of draw attention to this in a way that might make them think about the perception of their brand, because they’re not going to like your beer anymore if you think now they’re just starting to step on everybody, and they’re going to control more of the prices and less competition,” Pingree said.
While Pingree hopes to kill the merger by raising public pressure, it’s a different story in the Senate.
“We’re not trying to drum up support or opposition,” Sen. Amy Klobuchar (D-MN) told The Daily Beast in an interview. “We’ve asked no one to write letters. We won’t do that.”
The former prosecutor is the top Democrat on the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, which is already planning a hearing into the proposed merger once the full details are made public. Klobuchar and the chair of the subcommittee, Sen. Mike Lee (R-UT), a Mormon constitutional lawyer who hates monopolies more than he hates booze, want to use the committee’s full resources to delve into the details of the merger.
If you’ve witnessed congressional hearings in years, or even weeks, past—everything from steroid abuse in Major League Baseball to Benghazi—you may be brushing aside the notion that lawmakers can make a difference from within the confines of a stuffy hearing room.
Klobuchar disagrees. She argues that Congress has a unique role to play in the process, because the parties involved in the merger will be sworn in, thus facing jail time for perjury, before giving testimony.
“We actually have witnesses testifying under oath about what they see as the effect of the merger on both sides,” Klobuchar said. “It creates a record for the Justice Department to use. Mike [Lee] and I often do a follow-up, we do letters about our concerns, or what conditions we think should be in the merger. So what we are not the ultimate decision-maker, and no legislation needs to be passed. We’re like an investigative committee for Congress.”
Klobuchar plans to go into the hearing objectively, but her local Minnesota craft breweries will be in the back of her mind. “They are homegrown beer companies, and so the small craft brewers have legitimate concerns about being able to compete if there is a monopoly [or] that somehow creeps into a monopoly on distribution and makes it harder for them to distribute,” Klobuchar said.
When the details come out, Justice officials will likely balk at allowing one company to control more than two-thirds of the nation’s beer market, so the companies are expected to propose selling off some U.S. entities as they make a bigger grab at the global beer market, in places like Africa.
Everyone’s watching for that little devil hiding in the details.
Matt Laslo is a veteran congressional report and hosts the craft beer and politics show Bills and Brews.