Feds Save Beer Drinkers from the Possibility of Slightly Increased Prices

On Friday, the Department of Justice called off its antitrust case against Anheuser-Busch InBev (ABI), which had been poised to take over Grupo Modelo, the Mexico-based brewer of Corona. ABI will still take over most of Modelo, but the rights to sell the company's brands in the U.S will be turned over to an independent company, Constellation.

The move means instead of two massive brewers (ABI and MillerCoors), a large brewer (Heineken), and over 2,000 small brewers, the U.S. will now be served by two massive brewers, two large brewers (Modelo—now Constellation—controls seven percent of the U.S. market), and over 2,000 small brewers. According to the DOJ, this is a big victory for competition.

From the DOJ's press release:

As originally proposed, [the merger] would substantially lessen competition in the market for beer…. The department alleged that the transaction would result in consumers paying more for beer and would limit innovation in the beer market.

"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."

Sources not close to the investigation contend, however, that competition and innovation were not really in peril. These sources are the multitudinous plethora of arrays of delicious beers available pretty much freaking everywhere.

Of course, taxes account for about 45 percent of the cost of beer, so if the federal government was really interested in saving consumers some coin they could always relax the excise tax (which comes to $7.00 on each of the first 60,000 barrels produced and $18 per barrel after that). Or perhaps the DOJ could look into breaking up state-level wholesaling cartels, which have a government-granted stranglehold on supply chains.

Last month, Reason contributor Baylen Linnekin covered some of the regulatory challenges craft brewers face. Sadly, lack of corporate welfare does not seem to be one of those challenges. That story is over at The New School. H/T: Jacob Grier.