[Federal Register: November 25, 2008 (Volume 73, Number 228)]
[Notices]               
[Page 71682-71692]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25no08-100]                         

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DEPARTMENT OF JUSTICE

Antitrust Division

 
United States v. Inbev NV/SA; Proposed Final Judgment and 
Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Hold Separate Stipulation and Order, and Competitive Impact Statement 
have been filed with the United States District Court for the District 
of Columbia in United States v. InBev NV/SA, Civ. Action No. 08-cv-
01965. On November 14, 2008, the United States filed a Complaint 
alleging that the proposed acquisition by InBev NV/SA of Anheuser-Busch 
Companies, Inc., would violate section 7 of the Clayton Act, 15 U.S.C. 
18. The Complaint alleges that the acquisition would substantially 
reduce competition for sale of beer in the Buffalo, Rochester, and 
Syracuse, New York metropolitan areas. The proposed Final Judgment, 
filed at the same time as the Complaint, requires InBev to divest 
Labatt USA and grant a perpetual license to the acquirer to brew and 
sell Labatt brand beer for consumption throughout the United States.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection at the Department of 
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth 
Street, NW., Suite 1010, Washington, DC 20530 (202-514-2481), on the 
Department of Justice Web site (http://www.usdoj.gov/atr), and at the 
Office of the Clerk of the United States District Court for the 
District of Columbia. Copies of these materials may be obtained from 
the Antitrust Division upon request and payment of the copying fee set 
by Department of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Joshua H. Soven, Chief, Litigation I Section, Antitrust Division, 
Department of Justice, 1401 H Street, NW., Suite 4000, Washington, DC 
20530 (202-307-0001).

Patricia A. Brink,
Deputy Director, Office of Operations.

    United States of America, 1401 H Street, NW.,--Suite 4000, 
Washington, DC 20530. Plaintiff, v. Inbev N.V./S.A.
    Brouwerijplein 1, 3000 Leuven, Belgium, Inbev USA LLC, 50 Fountain 
Plaza--Suite 900, Buffalo, NY 14202, and Anheuser-Busch Companies, 
Inc., One Busch Place, St. Louis, MO 63118, Defendants. Case: 1:08-cv-
01965, Assigned to: Robertson, James, Assign. Date: 11/14/2008, 
Description: Antitrust.

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil action to 
enjoin the proposed acquisition of Anheuser-Busch Companies, Inc. 
(``Anheuser-Busch'') by InBev N.V./S.A. (``InBev'') and to obtain

[[Page 71683]]

other equitable relief. The United States alleges as follows:

I. Nature of the Action

    1. On July 13, 2008, Anheuser-Busch and InBev entered into an 
Agreement and Plan of Merger pursuant to which InBev intends to acquire 
100 percent of the voting securities of Anheuser-Busch in a transaction 
valued at approximately $52 billion. Anheuser-Busch is the largest 
brewing company in the United States, accounting for approximately 50 
percent of beer sales in the country. Its best selling brands are Bud 
Light and Budweiser. Belgium-based InBev is the second-largest brewer 
in the world. InBev's best-selling brands in the United States are 
Labatt, Stella Artois, and Becks. The proposed acquisition of Anheuser-
Busch by InBev would create the world's largest brewing company with 
annual revenues of over $36 billion.
    2. In three regions of upstate New York, the proposed acquisition 
would significantly increase the level of concentration in the market 
and substantially reduce competition by combining InBev's Labatt brands 
and Anheuser-Busch's Budweiser brands.
    3. In the Buffalo metropolitan area (``Buffalo'') and the Rochester 
metropolitan area (``Rochester''), the proposed acquisition would 
increase Anheuser-Busch's share of the beer market from approximately 
24 percent to approximately 45 percent, producing a highly concentrated 
market dominated by two firms--the combined InBev/Anheuser-Busch and 
MillerCoors (a joint venture between SABMiller and Coors Brewing Co.). 
MillerCoors has approximately a 26 percent share of the Buffalo and 
Rochester beer markets and no other firm has more than a five percent 
share.
    4. The proposed acquisition would also create a highly concentrated 
beer market in the Syracuse metropolitan area (``Syracuse''). In 
Syracuse, the proposed acquisition would increase Anheuser-Busch's 
share of the beer market from approximately 28 percent to approximately 
41 percent, with MillerCoors controlling approximately 28 percent. As 
in Buffalo and Rochester, no other firm has more than a five percent 
share of the beer market in Syracuse.
    5. The proposed acquisition would eliminate substantial head-to-
head competition between Anheuser-Busch's Budweiser and InBev's Labatt 
brands in Buffalo, Rochester, and Syracuse.
    6. The significant increase in market concentration that the 
proposed acquisition would produce in the Buffalo, Rochester, and 
Syracuse geographic markets, combined with the loss of head-to-head 
competition, is likely to substantially lessen competition, in 
violation of section 7 of the Clayton Act, resulting in higher prices 
for beer for consumers.

II. Jurisdiction and Venue

    7. The United States brings this action under section 15 of the 
Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain 
Defendants from violating section 7 of the Clayton Act, 15 U.S.C. 18. 
This Court has subject matter jurisdiction over this action pursuant to 
section 15 of the Clayton Act, 15 U.S.C. 25 and 28 U.S.C. 1331, 
1337(a), and 1345.
    8. Defendants Anheuser-Busch and InBev produce and sell beer in the 
flow of interstate commerce, and their production and sale of beer 
substantially affect interstate commerce. Defendants Anheuser-Busch and 
InBev transact business and are found in the District of Columbia, 
through, among other things, selling beer to customers in this 
District. Venue is proper for Anheuser-Busch in this District under 15 
U.S.C. 22. Venue is proper in the District of Columbia for Defendant 
InBev, a Belgian corporation, under 28 U.S.C. 1391(d).

III. The Defendants

    9. Anheuser-Busch, a Delaware corporation headquartered in St. 
Louis, Missouri, is the largest brewer in the United States and 
accounts for approximately 50 percent of beer sales nationwide. 
Anheuser-Busch operates 12 breweries in the United States. Anheuser-
Busch's best-selling brands are Budweiser and Bud Light.
    10. Belgium-based InBev is the second-largest brewer in the world, 
but does not operate any breweries in the United States. InBev's best-
selling brands in the United States are Stella, Becks, Bass, and 
Labatt. Most of InBev's brands, including Stella, Becks, and Bass, are 
imported, marketed, and sold in the United States by Anheuser-Busch 
pursuant to a 2006 import agreement (``Anheuser-Busch/InBev import 
agreement''). InBev's Labatt brands are excluded from the Anheuser-
Busch/InBev import agreement. The Labatt brands are brewed in Canada by 
InBev's subsidiary, Labatt Brewing Company Limited, and are imported 
and sold in the United States by InBev's subsidiary, InBev USA d/b/a 
Labatt USA (``IUSA''). Although InBev's overall market share in the 
United States is small (approximately two percent), the geographic 
markets are local, and Labatt brand beers account for a significant 
portion of the Buffalo, Rochester, and Syracuse beer markets.
    11. In Buffalo and Rochester, IUSA accounts for approximately 21 
percent of beer sales and Anheuser-Busch accounts for approximately 24 
percent of beer sales. In Syracuse, IUSA and Anheuser-Busch account for 
approximately 13 percent and 28 percent of beer sales, respectively. 
Combined, Anheuser-Busch and InBev would account for approximately 45 
percent of beer sales in Buffalo and Rochester, and over 41 percent of 
beer sales in Syracuse.

IV. Relevant Markets

A. Relevant Product Market

    12. Beer is an alcoholic beverage that is substantially 
differentiated from other alcoholic beverages by taste, quality, 
alcohol content, image, and price.
    13. Neither the price of wine nor the price of spirits 
significantly influences or constrains the price of beer. Purchasers of 
beer are unlikely to reduce their purchases of beer in response to a 
small but significant and non-transitory increase in the price of beer 
to an extent that would make such a price increase unprofitable.
    14. Beer is a line of commerce and a relevant product market within 
the meaning of section 7 of the Clayton Act.

B. Relevant Geographic Markets

    15. Beer is sold to consumers in local geographic markets through a 
three-tier distribution system in New York and throughout the United 
States. Brewers such as InBev and Anheuser-Busch sell beer to 
wholesalers (often known as ``distributors''), which, in turn, sell to 
retailers. In New York and throughout the United States, distributors' 
contracts with brewers contain territorial limits and prohibit 
distributors from selling outside their territories.
    16. Distributors cannot sell a brewer's products outside their 
territories without violating their contracts with the brewer. This 
allows brewers to charge different prices in different locales for the 
same package and brand of beer, and prevents individual distributors 
(and retailers) from defeating such price differences through 
arbitrage.
    17. Brewers develop beer pricing and promotion strategies on a 
``local'' market basis, based on an assessment of local competitive 
conditions, local demand for the brewers' beer, and local brand 
strength.
    18. Brewers selling beer in a metropolitan area would be able to 
increase the price of beer by a small but significant and non-
transitory amount

[[Page 71684]]

without losing sufficient sales to make such a price increase 
unprofitable.
    19. The metropolitan areas of Buffalo, Rochester, and Syracuse 
constitute three separate, relevant geographic markets for the sale of 
beer within the meaning of section 7 of the Clayton Act.

V. Likely Anticompetitive Effects

    20. The relevant beer markets are highly concentrated. In Buffalo 
and Rochester, the top three brewers: Anheuser-Busch, MillerCoors, and 
InBev (IUSA)--account for approximately 24 percent, 26 percent, and 21 
percent of the beer market, respectively. In Syracuse, Anheuser-Busch, 
MillerCoors and IUSA account for approximately 28 percent, 28 percent, 
and 13 percent of the beer market, respectively.
    21. If the proposed acquisition is permitted to occur, the beer 
markets in Buffalo and Rochester would become substantially more 
concentrated. The combined firm would control at least 45 percent of 
beer sales. The merged firm and MillerCoors would control over 70 
percent of beer sales. Using a standard concentration measure called 
the Herfindahl-Herschman Index (or ``HHI,'' defined and explained in 
Appendix A), the proposed acquisition would produce an HHI increase of 
approximately 1020 and a post-acquisition HHI of approximately 2790 in 
Buffalo and Rochester.
    22. If the proposed acquisition is permitted to occur, the Syracuse 
beer market also would become substantially more concentrated. The 
combined firm would control approximately 41 percent of the market, and 
the top two brewers--the merged firm and MillerCoors--would account for 
approximately 69 percent of beer sales. The proposed acquisition in 
Syracuse would produce an HHI increase of approximately 750 and a post-
acquisition HHI of approximately 2580.
    23. In Buffalo, Rochester, and Syracuse, the proposed acquisition 
would eliminate significant head-to-head competition between InBev's 
Labatt brands and Anheuser-Busch's Budweiser brands. Currently, InBev 
(through its IUSA subsidiary) and Anheuser-Busch compete in the 
relevant geographic markets through price discounts and various forms 
of promotions.
    24. The significant increase in market concentration that the 
proposed acquisition would produce in the Buffalo, Rochester, and 
Syracuse geographic markets, combined with the loss of head-to-head 
competition, is likely to substantially lessen competition in violation 
of section 7 of the Clayton Act, resulting in higher prices for beer 
for consumers.

VI. Absence of Countervailing Factors

    25. Responses from other competitors or new entry is not likely to 
prevent the likely anticompetitive effects of the proposed acquisition. 
Competition from other competitors is insufficient to prevent a small 
but significant and non-transitory price increase implemented by the 
Defendants in those markets from being profitable. Entry of a 
significant new competitor into the marketplace is particularly 
unlikely because a new entrant would not possess the highly-important 
brand acceptance necessary to succeed.
    26. The anticompetitive effects of the proposed acquisition are not 
likely to be eliminated or mitigated by any efficiencies that may be 
achieved by the acquisition.

VII. Violation Alleged

    27. The United States hereby incorporates paragraphs 1 through 26.
    28. The proposed acquisition of Anheuser-Busch by InBev would 
likely substantially lessen competition in interstate trade and 
commerce, in violation of section 7 of the Clayton Act, 15 U.S.C. 18, 
and would likely have the following effects, among others:
    (a) Actual and potential competition between Anheuser-Busch and 
InBev (through its IUSA subsidiary) for beer sales in the relevant 
geographic markets would be eliminated; and
    (b) Competition generally in the relevant geographic markets for 
beer would be substantially lessened.

Prayer for Relief

    The United States requests:
    1. That the proposed acquisition be adjudged to violate section 7 
of the Clayton Act, 15 U.S.C. 18;
    2. That the Defendants be permanently enjoined and restrained from 
carrying out the proposed acquisition or from entering into or carrying 
out any other agreement, understanding, or plan by which Anheuser-Busch 
would acquire, be acquired by, or merge with, any of the other 
Defendants;
    3. That the United States be awarded costs of this action; and
    4. That the United States have such other relief as the Court may 
deem just and proper.
    Respectfully submitted,

---- /s/ ------
Deborah A. Garza (DC Bar No. 395259),
Acting Assistant Attorney General.

---- /s/ ------
Patricia A. Brink,
Deputy Director, Office of Operations.

---- /s/ ------
Joshua H. Soven,
Chief (DC Bar No. 436633).

---- /s/ ------
Joseph M. Miller,
Assistant Chief (DC Bar No. 439965), Litigation I Section, (202) 
307-0827.

---- /s/ ------
Mitchell H. Glende,
Barry L. Creech (DC Bar No. 421070),
Scott I. Fitzgerald,
Tiffany Joseph-Daniels (DC Bar No. 481878),
Ryan Kantor,
David C. Kelly,
Karl D. Knutsen,
Michael T. Koenig,
Richard Martin,
Michelle Seltzer (DC Bar No. 475482),
Julie Tenney.

Trial Attorneys, U.S. Department of Justice, Antitrust Division, 
Litigation I Section. 1401 H Street, NW., Suite 4000, Washington, DC 
20530, (202) 353-3106.

Dated: November 14, 2008.

The United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Inbev N.V./S.A., Inbev USA 
LLC, and Anheuser-Busch Companies, Inc., Defendants. Case: 08-cv-Filed: 
Deck Type: Antitrust Date Stamp:--------.

[Proposed] Final Judgment

    Whereas, Plaintiff, United States of America, filed its Complaint 
on November 14, 2008, and the United States of America and defendants 
InBev N.V./S.A., InBev USA LLC d/b/a Labatt USA, and Anheuser-Busch 
Companies, Inc. (collectively, ``Defendants''), by their respective 
attorneys, have consented to the entry of this Final Judgment without 
trial or adjudication of any issue of fact or law, and without this 
Final Judgment constituting any evidence against or admission by any 
party regarding any issue of fact or law;
    And whereas, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    And whereas, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights or assets by the Defendants to 
assure that competition is not substantially lessened;
    And whereas, the United States requires Defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    And whereas, Defendants have represented to the United States that 
the divestitures required herein can and will be made and that 
Defendants will later raise no claim of hardship or difficulty as 
grounds for asking the Court to modify any of the divestiture 
provisions contained below;

[[Page 71685]]

    Now therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ordered, adjudged, and decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against Defendants under section 7 of the Clayton 
Act, as amended, 15 U.S.C. 18.

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means the entity or entities to whom Defendants 
divest the Divestiture Assets.
    B. ``Advertising'' means all existing advertising and promotional 
materials owned or Licensed by LBCL, including without limitation all 
copyrights therein, bearing the Licensed Marks for use in the 
marketing, sale, and distribution of Labatt Brand Beer in the United 
States.
    C. ``Anheuser-Busch'' means defendant Anheuser-Busch Companies, 
Inc., a Delaware corporation, with its headquarters in St. Louis, 
Missouri, its successors and assigns, and its subsidiaries, divisions, 
groups, affiliates, partnerships, and joint ventures, and their 
directors, officers, managers, agents, and employees.
    D. ``Beer'' means any fermented alcoholic beverage that (1) is 
composed in part of water, a type of starch, yeast, and a flavoring and 
(2) has undergone the process of brewing.
    E. ``Defendants'' means InBev N.V./S.A., InBev USA LLC d/b/a Labatt 
USA, and Anheuser-Busch Companies, Inc.
    F. ``Divestiture Assets'' means:
    (i) An exclusive, perpetual, assignable, transferable, and fully-
paid-up license that grants the Acquirer the right:
    (A) To brew Labatt Brand Beer in Canada and/or the United States 
for sale for consumption in the United States;
    (B) To promote, market, distribute, and sell Labatt Brand Beer for 
sale for consumption in the United States; and
    (C) To use all intellectual property rights associated with the 
brewing, marketing, sale, and distribution of Labatt Brand Beer for 
sale for consumption in the United States, including, without 
limitation, the Trade Dress, the Advertising, the Licensed Marks, the 
Recipes, and such molds and designs as are used in the manufacturing 
process of bottles for the Labatt Brand Beer;
    (ii) All production know-how for Labatt Brand Beer, including, 
without limitation, all Recipes and packaging, marketing, and 
distribution know-how and documentation; and
    (iii) All of the tangible and intangible assets of IUSA, including, 
without limitation, (A) all real property (owned or leased), office 
equipment, office furniture, fixtures, materials, supplies, and other 
tangible property of IUSA; (B) all contracts and agreements of IUSA 
except the Existing Import Agreement, including, without limitation, 
wholesaler and distributor agreements into which InBev or IUSA have 
entered for the sale or distribution of Labatt Brand Beer within the 
United States, sponsorship agreements with sports teams and other 
entities, agreements relating to the placement of advertising, 
agreements with public relations firms, and agreements with co-packers; 
(C) all existing inventories of Labatt Brand Beer owned by IUSA; (D) 
all customer lists, customer accounts, and credit records; (E) all 
licenses, permits, and authorizations issued by any governmental 
organization relating to the marketing, sales, and distribution of 
Labatt Brand Beer in the United States, including, without limitation, 
brand registrations; and (F) copies of all business, financial and 
operational books, records and data, both current and historical, that 
relate to Labatt Brand Beer sold and distributed in the United States; 
provided, however, that, for books, records, or data that relate to 
Labatt Brand Beer, but not solely to Labatt Brand Beer sold in the 
United States, LBCL shall provide only the excerpts of those books, 
records, or data that relate to the Labatt Brand Beer sold and 
distributed in the United States;
    (iv) Provided, however, that the Acquirer shall have no right to 
use, and shall not use, the term ``InBev'' or any derivative of the 
term ``InBev,'' and provided, further, that the Acquirer shall have no 
rights to market or sell any brands of Beer owned by InBev other than 
Labatt Brand Beer.
    G. ``Existing Import Agreement'' means the Exclusive Distributor 
Agreement dated as of December 1, 1994, among LBCL, Labatt Importers 
Inc., Labatt's USA Inc., and John Labatt Limited.
    H. ``InBev'' means defendant InBev N.V./S.A., a public company 
organized under the laws of Belgium, with its headquarters in Leuven, 
Belgium, its successors and assigns, and its subsidiaries, divisions, 
groups, affiliates, partnerships, joint ventures, and their respective 
directors, officers, managers, agents, and employees.
    I. ``IUSA'' means defendant InBev USA LLC d/b/a Labatt USA, a 
Delaware limited liability company and wholly-owned, indirect 
subsidiary of InBev, with its headquarters in Buffalo, New York.
    J. ``Labatt Brand Beer'' means the following brands of Beer: Labatt 
Blue, Labatt Blue Light, Labatt's 50, Labatt ICE, Labatt Double Blue, 
Labatt Nordic, Labatt Select, Labatt Non-Alcoholic, Labatt Holiday, and 
Max ICE, and any extensions of any one or more of such brands for use 
in connection with brewing, distributing, promoting, marketing, or 
selling Beer as may be developed from time to time by the Acquirer.
    K. ``LBCL'' means Labatt Brewing Company Limited, a Canadian 
corporation and wholly-owned, indirect subsidiary of Companhia de 
Bebidas das Am[eacute]ricas--AmBev, a Brazilian corporation and 
majority-owned subsidiary of InBev.
    L. ``Licensed Marks'' means all trademarks, service marks, or trade 
names for the Labatt Brand Beer belonging or licensed to LBCL and/or 
its subsidiaries, divisions, groups, affiliates, partnerships, and 
joint ventures (whether registered or unregistered, or whether the 
subject of a pending application) used to brew, distribute, market, and 
sell Labatt Brand Beer in the United States.
    M. ``Recipes'' means all LBCL's formulae, recipes, processes, and 
specifications specified by LBCL for use in connection with the 
production and packaging of Labatt Brand Beer in the United States, 
including, without limitation, LBCL's yeast, brewing processes, 
equipment and material specifications, trade and manufacturing secrets, 
know-how, and scientific and technical information for the Labatt Brand 
Beer.
    N. ``Supply Agreement'' means an agreement pursuant to which InBev 
shall supply to the Acquirer Labatt Brand Beer in quantities and units 
and at prices agreed to between InBev and the Acquirer subject to the 
approval of the United States in its sole discretion.
    O. ``Trade Dress'' means the print, style, color, labels, and other 
elements of trade dress currently used by LBCL and/or its subsidiaries, 
divisions, groups, affiliates, partnerships, and joint ventures in 
connection with the marketing, sale, and distribution of Labatt Brand 
Beer in the United States.

III. Applicability

    A. This Final Judgment applies to the Defendants, as defined above, 
and all other persons in active concert or participation with the 
Defendants who receive actual notice of this Final Judgment by personal 
service or otherwise.

[[Page 71686]]

    B. If, prior to complying with sections IV and V of this Final 
Judgment, Defendants sell, license, or otherwise dispose of all or 
substantially all of their assets or lesser business units that include 
the Divestiture Assets, Defendants shall require the purchaser to be 
bound by the provisions of this Final Judgment. Defendants need not 
obtain such an agreement from the Acquirer of the assets divested 
pursuant to this Final Judgment.

IV. Divestiture

    A. Defendants are ordered and directed, within ninety (90) calendar 
days after the filing of the Complaint in this matter, or five (5) 
calendar days after notice of the entry of this Final Judgment by the 
Court, whichever is later, to divest the Divestiture Assets in a manner 
consistent with this Final Judgment to an Acquirer approved by the 
United States in its sole discretion. The United States, in its sole 
discretion, may agree to one or more extensions of this time-period, 
such extensions not to exceed ninety (90) calendar days in total, and 
shall notify the Court in such circumstances. Defendants agree to use 
their best efforts to divest the Divestiture Assets as expeditiously as 
possible.
    B. In accomplishing the divestiture ordered by this Final Judgment, 
Defendants promptly shall make known, by usual and customary means, the 
availability of the Divestiture Assets. Defendants shall inform any 
person making inquiry regarding a possible purchase of the Divestiture 
Assets that they are being divested pursuant to this Final Judgment and 
provide that person with a copy of this Final Judgment. Defendants 
shall offer to furnish to all prospective Acquirers, subject to 
customary confidentiality assurances, all information and documents 
relating to the Divestiture Assets customarily provided in a due 
diligence process except such information or documents subject to the 
attorney-client privilege or work-product doctrine. Defendants shall 
make available such information to the United States at the same time 
that such information is made available to any other person.
    C. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestiture of the Divestiture Assets.
    D. Defendants shall warrant to the Acquirer that each asset will be 
operational on the date of sale.
    E. Defendants shall not manufacture, market, distribute, introduce, 
or sell in the United States any Beer under any brand name or trade 
name that contains the word ``Labatt'' after the date of the execution 
of the divestiture agreement with the Acquirer, except (i) pursuant to 
the terms of the Supply Agreement, and (ii) as necessary to satisfy a 
legal requirement to identify the brewer for and origin of other brands 
of beer brewed by LBCL and sold in the United States where the 
corporate identity of the brewer includes the word ``Labatt''; 
provided, however, that Defendants shall not be in violation of this 
consent decree if an independent party ships Labatt Brand Beer from 
Canada to the United States without Defendants' permission or 
knowledge.
    F. Defendants shall provide the Acquirer and the United States 
information relating to IUSA's personnel involved in the management, 
operations, or sales activities in the United States relating to the 
Divestiture Assets to enable the Acquirer to make offers of employment. 
Defendants will not interfere with any efforts by the Acquirer to 
employ any personnel employed by IUSA having management, operations, or 
sales responsibilities relating to the Divestiture Assets.
    G. Unless the United States otherwise consents in writing, 
Defendants shall permit prospective Acquirers of the Divestiture Assets 
to have reasonable access to personnel and to make reasonable 
inspections of the physical facilities; access to any and all 
environmental, zoning, and other permit documents and information; and 
access to any and all financial, operational, or other documents and 
information customarily provided as part of a due diligence process.
    H. Notwithstanding anything to the contrary in this Final Judgment, 
at the option of the Acquirer, Defendants shall enter into a transition 
services agreement for a limited period with respect to information 
technology support, information technology licensing, computer 
operations, data processing, logistics support, and such other services 
as are reasonably necessary to operate the Divestiture Assets, with the 
scope, terms, and conditions of such agreement being subject to the 
approval of the United States in its sole discretion. Such an agreement 
may not exceed twelve (12) months from the date of divestiture.
    I. Unless the United States otherwise consents in writing, the 
divestiture pursuant to section IV, or by trustee appointed pursuant to 
Section V, of this Final Judgment, shall include the entire Divestiture 
Assets and shall be accomplished in such a way as to satisfy the United 
States, in its sole discretion, that the Divestiture Assets can and 
will be used by the Acquirer as part of a viable, ongoing business 
engaged in the sale of Beer; provided that it is demonstrated to the 
sole satisfaction of the United States that the Divestiture Assets will 
remain viable and the divestiture of such assets will remedy the 
competitive harm alleged in the Complaint. The divestiture, whether 
pursuant to section IV or section V of this Final Judgment,
    (1) Shall be made to an Acquirer that, in the United States's sole 
judgment, has the intent and capability (including the necessary 
managerial, operational, technical, and financial capability) of 
competing effectively in the sale of Beer; and
    (2) Shall be accomplished so as to satisfy the United States, in 
its sole discretion, that none of the terms of any agreement between 
the Acquirer and Defendants give Defendants the ability unreasonably to 
raise the Acquirer's costs, to lower the Acquirer's efficiency, or 
otherwise to interfere in the ability of the Acquirer to compete 
effectively.
    J. As part of a divestiture, and at the option of the Acquirer, 
Defendants shall negotiate and consummate a Supply Agreement to supply 
Labatt Brand Beer in quantities and units and at prices agreed to 
between InBev and the Acquirer with the approval of the United States. 
The Supply Agreement shall be no more than three (3) years in length. 
The terms and conditions of any such Supply Agreement shall be subject 
to the approval of the United States in its sole discretion. During the 
term of the Supply Agreement, Defendants shall establish, implement, 
and maintain procedures and take such other steps that are reasonably 
necessary to prevent the disclosure of the quantities and units of 
Labatt Brand Beer ordered or purchased from the Defendants by the 
Acquirer, the prices paid by the Acquirer, and any other competitively 
sensitive information regarding the Defendants' or the Acquirer's 
performance under the Supply Agreement, to any employee of the 
Defendants that has direct responsibilities for marketing, 
distributing, or selling Beer in competition with the Acquirer in the 
United States.

V. Appointment of Trustee

    A. If Defendants have not divested the Divestiture Assets within 
the time period specified in section IV(A), Defendants shall notify the 
United States of that fact in writing. Upon application of the United 
States, the Court shall appoint a trustee selected by the United States 
and approved by the Court to effect the divestiture of the Divestiture 
Assets.

[[Page 71687]]

    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Divestiture Assets. The 
trustee shall have the power and authority to accomplish the 
divestiture to an Acquirer acceptable to the United States at such 
price and on such terms as are then obtainable upon reasonable effort 
by the trustee, subject to the provisions of sections IV, V, and VI of 
this Final Judgment, and shall have such other powers as this Court 
deems appropriate. Subject to section V(D) of this Final Judgment, the 
trustee may hire at the cost and expense of Defendants any investment 
bankers, attorneys, or other agents, who shall be solely accountable to 
the trustee, reasonably necessary in the trustee's judgment to assist 
in the divestiture.
    C. Defendants shall not object to a sale by the trustee on any 
ground other than the trustee's malfeasance. Any such objection by 
Defendants must be conveyed in writing to the United States and the 
trustee within ten (10) calendar days after the trustee has provided 
the notice required under section VI.
    D. The trustee shall serve at the cost and expense of Defendants, 
on such terms and conditions as the United States approves, and shall 
account for all monies derived from the sale of the assets sold by the 
trustee and all costs and expenses so incurred. After approval by the 
Court of the trustee's accounting, including fees for its services and 
those of any professionals and agents retained by the trustee, all 
remaining money shall be paid to Defendants and the trust shall then be 
terminated. The compensation of the trustee and any professionals and 
agents retained by the trustee shall be reasonable in light of the 
value of the Divestiture Assets and based on a fee arrangement 
providing the trustee with an incentive based on the price and terms of 
the divestiture and the speed with which it is accomplished, but 
timeliness is paramount.
    E. Defendants shall use their best efforts to assist the trustee in 
accomplishing the required divestiture. The trustee and any 
consultants, accountants, attorneys, and other persons retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of the business to be divested, and Defendants 
shall develop financial and other information relevant to such business 
as the trustee may reasonably request, subject to reasonable protection 
for trade secrets or other confidential research, development, or 
commercial information. Defendants shall take no action to interfere 
with or to impede the trustee's accomplishment of the divestiture.
    F. After its appointment, the trustee shall file monthly reports 
with the United States and the Court setting forth the trustee's 
efforts to accomplish the divestiture ordered under this Final 
Judgment. To the extent such reports contain information that the 
trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. Such reports shall include the name, 
address, and telephone number of each person who, during the preceding 
month, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about acquiring any interest in the Divestiture Assets, and 
shall describe in detail each contact with any such person. The trustee 
shall maintain full records of all efforts made to divest the 
Divestiture Assets.
    G. If the trustee has not accomplished the divestiture ordered 
under this Final Judgment within six (6) months after its appointment, 
the trustee shall promptly file with the Court a report setting forth 
(1) the trustee's efforts to accomplish the required divestiture; (2) 
the reasons, in the trustee's judgment, why the required divestiture 
has not been accomplished; and (3) the trustee's recommendations. To 
the extent such reports contain information that the trustee deems 
confidential, such reports shall not be filed in the public docket of 
the Court. The trustee shall at the same time furnish such report to 
the United States, which shall have the right to make additional 
recommendations consistent with the purpose of the trust. The Court 
thereafter shall enter such orders as it shall deem appropriate to 
carry out the purpose of this Final Judgment, which may, if necessary, 
include extending the trust and the term of the trustee's appointment 
by a period requested by the United States.

VI. Notice of Proposed Divestiture

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, Defendants or the trustee, whichever is then 
responsible for effecting the divestiture required herein, shall notify 
the United States of any proposed divestiture required by section IV or 
V of this Final Judgment. If the trustee is responsible, it shall 
similarly notify Defendants. The notice shall set forth the details of 
the proposed divestiture and list the name, address, and telephone 
number of each person not previously identified who offered or 
expressed an interest in or desire to acquire any ownership interest in 
the Divestiture Assets, together with full details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States may request from Defendants, 
the proposed Acquirer, any other third party, or the trustee, if 
applicable, additional information concerning the proposed divestiture, 
the proposed Acquirer, and any other potential Acquirer. Defendants and 
the trustee shall furnish any additional information requested within 
fifteen (15) calendar days of the receipt of the request, unless the 
parties shall otherwise agree.
    C. Within thirty (30) calendar days after receipt of the notice, or 
within twenty (20) calendar days after the United States has been 
provided the additional information requested from Defendants, the 
proposed Acquirer, any third party, and the trustee, whichever is 
later, the United States shall provide written notice to Defendants and 
the trustee, if there is one, stating whether or not it objects to the 
proposed divestiture. If the United States provides written notice that 
it does not object, the divestiture may be consummated, subject only to 
Defendants' limited right to object to the sale under section V(C) of 
this Final Judgment. Absent written notice that the United States does 
not object to the proposed Acquirer or upon objection by the United 
States, a divestiture proposed under section IV or Section V shall not 
be consummated. Upon objection by Defendants under section V(C), a 
divestiture proposed under section V shall not be consummated unless 
approved by the Court.

VII. Financing

    Defendants shall not finance all or any part of any purchase made 
pursuant to section IV or V of this Final Judgment.

VIII. Hold Separate

    Until the divestiture required by this Final Judgment has been 
accomplished, Defendants shall take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by this Court. 
Defendants shall take no action that would jeopardize the divestiture 
ordered by this Court.

IX. Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestiture has been completed under section IV or V, Defendants 
shall deliver to the United States an affidavit as to the fact and 
manner of its compliance with section

[[Page 71688]]

IV or V of this Final Judgment. Each such affidavit shall include the 
name, address, and telephone number of each person who, during the 
preceding thirty (30) calendar days, made an offer to acquire, 
expressed an interest in acquiring, entered into negotiations to 
acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Divestiture Assets, and shall describe in detail each 
contact with any such person during that period. Each such affidavit 
shall also include a description of the efforts Defendants have taken 
to solicit buyers for the Divestiture Assets, and to provide required 
information to a prospective Acquirer, including the limitations, if 
any, on such information. Assuming the information set forth in the 
affidavit is true and complete, any objection by the United States to 
information provided by Defendants, including limitation on 
information, shall be made within fourteen (14) calendar days of 
receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, Defendants shall deliver to the United States an 
affidavit that describes in reasonable detail all actions Defendants 
have taken and all steps Defendants have implemented on an ongoing 
basis to comply with section VIII of this Final Judgment. Defendants 
shall deliver to the United States an affidavit describing any changes 
to the efforts and actions outlined in Defendants' earlier affidavits 
filed pursuant to this section within fifteen (15) calendar days after 
the change is implemented.
    C. Defendants shall keep all records of all efforts made to 
preserve and divest the Divestiture Assets until one year after such 
divestiture has been completed.

X. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of determining whether this Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time authorized representatives of the United States 
Department of Justice Antitrust Division (``DOJ'') including 
consultants and other persons retained by the United States, shall, 
upon written request of an authorized representative of the Assistant 
Attorney General in charge of the Antitrust Division, and on reasonable 
notice to Defendants, be permitted:
    (1) Access during Defendants' office hours to inspect and copy, or 
at the option of the United States, to require Defendants to provide 
hard copy or electronic copies of, all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control of 
Defendants, relating to any matters contained in this Final Judgment; 
and
    (2) To interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by Defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
Defendants shall submit written reports or respond to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. If, at the time information or documents are furnished by 
Defendants to the United States, Defendants represent and identify in 
writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(1)(G) of the 
Federal Rules of Civil Procedure, and Defendants mark each pertinent 
page of such material, ``Subject to claim of protection under Rule 
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United 
States shall give Defendants ten (10) calendar days' notice prior to 
divulging such material in any legal proceeding (other than a grand 
jury proceeding).

XI. No Reacquisition

    Defendants may not reacquire any part of the Divestiture Assets 
during the term of this Final Judgment.

XII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIII. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten (10) years from the date of its entry.

XIV. Public Interest Determination

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16, including making copies available to the 
public of this Final Judgment, the Competitive Impact Statement, and 
any comments thereon and the United States's responses to comments. 
Based upon the record before the Court, which includes the Competitive 
Impact Statement and any comments and responses to comments filed with 
the Court, entry of this Final Judgment is in the public interest.

Date:------------------------------------------------------------------

Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16.

-----------------------------------------------------------------------
United States District Judge

The United States District Court for the District of Columbia

    United States of America, Plaintiff, v. InBev N.V./S.A., InBev USA 
LLC, and Anheuser-Busch Companies, Inc., Defendants. Case: 1:08-cv-
01965 Assigned To: Robertson, James Assign. Date: 11/14/2008 
Description: Antitrust

Competitive Impact Statement

    Plaintiff United States of America (``United States''), pursuant to 
section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or 
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact 
Statement relating to the proposed Final Judgment submitted for entry 
in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On November 14, 2008, the United States filed a civil antitrust 
Complaint seeking to enjoin the proposed acquisition of Anheuser-Busch 
Companies, Inc. (``Anheuser-Busch'') by InBev N.V./S.A. (``InBev''). 
The Complaint alleges that the likely effect of the merger would be to 
lessen competition substantially in the market for beer in the 
metropolitan areas of Buffalo, Rochester, and Syracuse, New York, in 
violation of section 7 of the Clayton Act, 15 U.S.C. 18. In each of 
these metropolitan areas, the transaction would combine two of the 
three major manufacturers of beer, creating a highly concentrated 
market. The transaction would also eliminate substantial head-to-head 
competition between InBev and

[[Page 71689]]

Anheuser-Busch in these regions. This loss of competition likely would 
result in higher beer prices to consumers in those areas. At the same 
time that the Complaint was filed, the United States also filed a Hold 
Separate Stipulation and Order (``Stipulation'') and a proposed Final 
Judgment, which are designed to eliminate the anticompetitive effects 
of the merger.
    Under the proposed Final Judgment, which is explained more fully in 
section III, Defendants are required to divest InBev USA d/b/a Labatt 
USA (``IUSA''), a Delaware limited liability company and wholly-owned 
subsidiary of InBev with its headquarters in Buffalo, New York, and a 
perpetual, assignable, transferable, and fully-paid-up license and the 
other rights needed to brew, promote, market, distribute, and sell 
Labatt brand beer for consumption in the United States (hereafter the 
``Divestiture Assets''). Under the terms of the Stipulation, Defendants 
will take certain steps to ensure that the Divestiture Assets are 
operated as an ongoing, economically viable, and independent 
competitive business in the brewing, promotion, marketing, 
distribution, and sale of Labatt brand beer for consumption in the 
United States.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. Events Giving Rise to the Alleged Violation

A. Defendants and the Proposed Transaction

    On July 13, 2008, Anheuser-Busch and InBev entered into an 
Agreement and Plan of Merger pursuant to which InBev intends to acquire 
100 percent of the voting securities of Anheuser-Busch in a transaction 
valued at approximately $52 billion. The proposed acquisition of 
Anheuser-Busch by InBev would create the world's largest brewing 
company with annual revenues of over $36 billion.
    Anheuser-Busch, a Delaware corporation headquartered in St. Louis, 
Missouri, is the largest brewing company in the United States, 
accounting for approximately 50 percent of beer sales in the country. 
Anheuser-Busch's best-selling brands are Budweiser and Bud Light. In 
the Buffalo and Rochester metropolitan areas, Anheuser-Busch accounts 
for approximately 24 percent of beer sales.\1\ In the Syracuse 
metropolitan area, Anheuser-Busch accounts for approximately 28 percent 
of beer sales.
---------------------------------------------------------------------------

    \1\ The market shares for the Buffalo, Rochester, and Syracuse 
metropolitan areas are calculated from weekly AC Nielsen grocery 
store scanner data. This data is not available separately for 
Buffalo and Rochester, and so the market share calculations are 
based on a combined Buffalo/Rochester area. Information Resources, 
Inc. (``IRI'') compiles drug store scanner data separately for 
Buffalo and Rochester, and the IRI data indicates that the AC 
Nielsen data may underestimate the Defendants' shares of beer sales 
in Buffalo and Rochester. Based on IRI drug store data, in Buffalo, 
Anheuser-Busch accounts for 32 percent of beer sales and InBev 
accounts for 23 percent of beer sales. The IRI drug store data shows 
that, in Rochester, Anheuser-Busch accounts for 33 percent of beer 
sales and InBev accounts for 19 percent of beer sales.
---------------------------------------------------------------------------

    Belgium-based InBev is the second-largest brewer in the world. 
InBev's best-selling brands in the United States are Labatt, Stella 
Artois, Bass, and Becks. Although InBev's share of beer sales 
nationwide is small, in the Buffalo, Rochester, and Syracuse 
metropolitan areas, it is substantial. In Buffalo and Rochester, 
InBev's wholly-owned subsidiary, IUSA, accounts for at least 21 percent 
of beer sales. In Syracuse, IUSA accounts for approximately 13 percent 
of beer sales. Combined, IUSA and Anheuser-Busch control at least 45 
percent of beer sales in Buffalo and Rochester and approximately 41 
percent of beer sales in Syracuse. MillerCoors, the third significant 
competitor, accounts for approximately 26 percent of sales in Buffalo 
and Rochester and 28 percent of sales in Syracuse. No other competitor 
sells more than 5 percent of the beer sold in these areas.

B. Competitive Effects of the Proposed Merger

1. Beer Is the Relevant Product Market
    The Complaint alleges that beer is a line of commerce and a 
relevant product market within the meaning of section 7 of the Clayton 
Act. Beer is an alcoholic beverage that is substantially differentiated 
from other alcoholic beverages by taste, quality, alcohol content, 
image and price. Neither the price of wine nor the price of spirits 
significantly influences or constrains the price of beer. Purchasers of 
beer are unlikely to reduce their purchases of beer in response to a 
small but significant and non-transitory increase in the price of beer 
to an extent that would make such a price increase unprofitable. The 
manufacture and sale of beer is the relevant product market.
2. The Metropolitan Areas of Buffalo, Rochester, and Syracuse, New 
York, Are Relevant Geographic Markets
    As alleged in the Complaint, the metropolitan areas of Buffalo, 
Rochester, and Syracuse, New York, constitute three separate, relevant 
geographic markets for the sale of beer within the meaning of the 
Clayton Act. Beer is sold to consumers in local geographic markets 
through a three-tier distribution system in New York and throughout the 
United States. Brewers such as InBev and Anheuser-Busch sell beer to 
wholesalers (often known as ``distributors''), which, in turn, sell to 
retailers. In New York and throughout the United States, distributors' 
contracts with brewers contain territorial limits and prohibit 
distributors from selling beer outside their respective territories.
    Because distributors cannot sell a brewer's products outside their 
territories without violating their contracts with the brewer, brewers 
can charge different prices in different locales for the same package 
and brand of beer, and individual distributors (and retailers) cannot 
defeat such price differences through arbitrage. Consequently, brewers 
develop beer pricing and promotion strategies on a ``local'' market 
basis, based on an assessment of local competitive conditions, local 
demand for the brewers' beer, and local brand strength. Brewers selling 
beer in a metropolitan area would be able to increase the price of beer 
by a small but significant and non-transitory amount without losing 
sufficient sales to make such a price increase unprofitable.
3. Anticompetitive Effects of the Proposed Merger
    As alleged in the Complaint, the Buffalo, Rochester, and Syracuse 
beer markets are highly concentrated. The top three brewers--Anheuser-
Busch, MillerCoors, and IUSA--respectively possess approximately 24 
percent, 26 percent, and 21 percent of the Buffalo and Rochester beer 
markets. In the Syracuse geographic market, the same three brewers 
respectively possess approximately 28 percent, 28 percent, and 13 
percent of the beer market.
    If the proposed acquisition is permitted to occur, the beer markets 
in the Buffalo, Rochester, and Syracuse geographic markets would become 
substantially more concentrated. Combined, Defendants would account for 
at least 45 percent of beer sales in Buffalo and Rochester and 41 
percent in Syracuse, and the top two brewers--Defendants and 
MillerCoors--would control about 70 percent of sales in each

[[Page 71690]]

market. No other competitor would account for more than 5 percent of 
sales in these markets. Using a concentration measure called the 
Herfindahl-Herschman Index (or ``HHI'', defined and explained in 
Appendix A), the proposed acquisition would produce an HHI increase of 
approximately 1,020 and a post-acquisition HHI of approximately 2,790 
in the Buffalo and Rochester markets. In Syracuse, the proposed 
acquisition would produce an HHI increase of approximately 750 and a 
post-acquisition HHI of approximately 2,580.
    The transaction would also eliminate significant head-to-head 
pricing and promotion competition between InBev's Labatt brands and 
Anheuser-Busch's Budweiser brands in each of the three geographic 
markets. The significant increase in market concentration that the 
transaction would produce in the three geographic markets, combined 
with the loss of head-to-head competition, is likely to substantially 
lessen competition, in violation of section 7 of the Clayton Act, 
resulting in higher prices for beer.
4. Neither Supply Responses Nor Entry Would Prevent the Likely 
Anticompetitive Effects of the Proposed Merger
    The Complaint alleges that supply responses from competitors or 
potential competitors would not likely prevent the anticompetitive 
effects of the proposed acquisition of Anheuser-Busch by InBev. 
Competition from other competitors is insufficient to prevent a small 
but significant and non-transitory price increase implemented by the 
Defendants in those markets from being profitable. Entry of a 
significant new competitor into the marketplace is particularly 
unlikely because a new entrant would not possess the highly-important 
brand acceptance necessary to succeed.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment is designed to eliminate the 
anticompetitive effects identified in the Complaint by requiring the 
Defendants to divest IUSA and all of the real and intellectual property 
rights required to brew, promote, market, distribute, and sell Labatt 
brand beer for consumption in the United States. These rights include 
an exclusive, perpetual, assignable, transferable, and fully-paid-up 
license that grants the Acquirer the rights to (a) brew Labatt brand 
beer in Canada and/or the United States, (b) promote, market, 
distribute, and sell Labatt brand beer for consumption in the United 
States, and (c) use all of the intellectual property rights associated 
with the marketing, sale, and distribution of Labatt brand beer for 
consumption in the United States, including the trade dress, the 
advertising, the licensed marks, and such molds and designs as are used 
in the manufacturing process of bottles for the Labatt brand beer. 
Final Judgment II(F) and IV(A).
    Further, to ensure that the Acquirer can brew Labatt beer without 
any loss of quality or consistency, the proposed Final Judgment 
requires Defendants to sell to the Acquirer all production know-how for 
Labatt brand beer, including recipes, packaging and marketing and 
distribution know-how and documentation. Final Judgment III(F) and 
IV(A). The recipes required to be divested include all formulae, 
recipes, processes and specifications specified * * * for use in 
connection with the production and packaging of Labatt Brand Beer in 
the United States, including * * * yeast, brewing processes, equipment 
and material specifications, trade and manufacturing secrets, know-how 
and scientific and technical information * * *. Final Judgment II(M).
    The proposed Final Judgment ensures the uninterrupted sale of 
Labatt brand beer in the United States by requiring Defendants to 
divest all rights pursuant to distributor contracts and, at the option 
of the Acquirer, to negotiate a transition services agreement of up to 
one year in length, and to enter into a supply contract for Labatt 
brand beer sufficient to meet all or part of the Acquirer's needs for a 
period of up to three years. Final Judgment III(F)(iv) and IV(H). If 
the Defendants and the Acquirer enter into such a supply contract, the 
proposed Final Judgment will prevent the exchange of competitively 
sensitive information between them; the Defendants are required to 
implement procedures that will prevent the disclosure of the quantities 
and units of Labatt brand beer ordered or purchased from the Defendants 
by the Acquirer, the prices paid by the Acquirer, and any other 
competitively sensitive information regarding the Defendants' or the 
Acquirer's performance under the Supply Agreement, to any employee of 
the Defendants who has direct responsibilities for marketing, 
distributing, or selling beer in competition with the Acquirer in the 
United States. Final Judgment IV(J).
    To ensure that the Acquirer can continue to develop, grow, and 
improve the Labatt brand, the proposed Final Judgment requires 
Defendants to grant to the Acquirer a perpetual license that will allow 
the Acquirer to brew, distribute, market, and sell ``extensions'' of 
Labatt brand beer (e.g., a ``Light'' or ``Ice'' version). The extension 
of beer brands has constituted a significant form of competition among 
beer brewers in recent years.
    The divestiture remedies the anticompetitive effects of the merger 
by requiring InBev to divest the Divestiture Assets to an independent, 
viable acquirer that can compete with the merged Anheuser-Busch/InBev. 
Defendants are required to satisfy the United States in its sole 
discretion that the Divestiture Assets will be operated as a viable, 
ongoing business that will compete effectively in the relevant markets, 
and that the divestiture will successfully remedy the otherwise 
anticipated anticompetitive effects of the proposed merger. Defendants 
must take all reasonable steps necessary to accomplish the divestiture 
quickly and shall cooperate with prospective acquirers.
    The proposed Final Judgment requires Defendants, within ninety (90) 
days after the filing of the Complaint or five (5) calendar days after 
notice of the entry of this Final Judgment by the Court, whichever is 
later, to divest the Divestiture Assets, which will be used by the 
acquirer as part of a viable, ongoing business of brewing, promoting, 
marketing, distributing and selling Labatt brand beer for consumption 
in the United States.
    In the event that Defendants do not accomplish the divestiture 
within the periods prescribed in the proposed Final Judgment, the Final 
Judgment provides that the Court will appoint a trustee selected by the 
United States to effect the divestiture. If a trustee is appointed, the 
proposed Final Judgment provides that Defendants will pay all costs and 
expenses of the trustee. The trustee's commission will be structured so 
as to provide an incentive for the trustee based on the speed with 
which the divestiture is accomplished and the price and terms obtained. 
After his or her appointment becomes effective, the trustee will file 
monthly reports with the Court and the United States setting forth his 
or her efforts to accomplish the divestiture. If the requisite 
divestiture has not been accomplished at the end of the trustee's term, 
the trustee and the United States will make recommendations to the 
Court, which shall enter such orders as appropriate in order to carry 
out the purpose of the trust, including extending the trust or the term 
of the trustee's appointment.
    Until the divestiture under the proposed Final Judgment has been

[[Page 71691]]

accomplished, Defendants are required to comply with a Hold Separate 
Stipulation and Order. Pursuant to this Stipulation and Order, the 
Defendants are required to preserve, maintain, and operate the 
Divestiture Assets as an ongoing business, and prohibited from taking 
any action that would jeopardize the divestiture required by the 
proposed Final Judgment.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of section 5(a) of the Clayton Act, 15 U.S.C. 
16(a), the proposed Final Judgment has no prima facie effect in any 
subsequent private lawsuit that may be brought against the Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register, or the last date of 
publication in a newspaper of the summary of this Competitive Impact 
Statement, whichever is later. All comments received during this period 
will be considered by the United States Department of Justice, which 
remains free to withdraw its consent to the proposed Final Judgment at 
any time prior to the Court's entry of judgment. The comments and the 
response of the United States will be filed with the Court and 
published in the Federal Register. Written comments should be submitted 
to: Joshua H. Soven, Chief, Litigation I Section, 1401 H Street, NW., 
Suite 4000, Antitrust Division, U.S. Department of Justice, Washington, 
DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against Defendants. The 
United States could have sought preliminary and permanent injunctions 
against the proposed merger. The United States is satisfied, however, 
that the divestiture of assets described in the proposed Final Judgment 
will preserve competition for the provision of beer in the relevant 
markets identified by the United States. Thus the proposed Final 
Judgment would achieve all or substantially all of the relief the 
United States would have obtained through litigation, but avoids the 
time, expense and uncertainty of a full trial on the merits of the 
Complaint.

VII. Standard of Review Under the APPA For the Proposed Final Judgment

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a sixty-day comment period, after which the court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 16(e)(1). In making that determination, 
the court, in accordance with the statute as amended in 2004, is 
required to consider:
    (A) The competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative remedies 
actually considered, whether its terms are ambiguous, and any other 
competitive considerations bearing upon the adequacy of such judgment 
that the court deems necessary to a determination of whether the 
consent judgment is in the public interest; and
    (B) The impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and individuals 
alleging specific injury from the violations set forth in the complaint 
including consideration of the public benefit, if any, to be derived 
from a determination of the issues at trial.

15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, 
the court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public 
interest standard under the Tunney Act).\2\
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    \2\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 
489 F. Supp. 2d at 11 (concluding that the 2004 amendments 
``effected minimal changes'' to Tunney Act review).
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    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA a court considers, among other things, 
the relationship between the remedy secured and the specific 
allegations set forth in the government's complaint, whether the decree 
is sufficiently clear, whether enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. See 
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the 
relief secured by the decree, a court may not ``engage in an 
unrestricted evaluation of what relief would best serve the public.'' 
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (citing 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see 
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 
F. Supp. 2d 37, 40 (D.D.C. 2001). Courts have held that:

[t]he balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\3\
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    \3\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
``reaches of the public interest'').

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[[Page 71692]]

    In determining whether a proposed settlement is in the public 
interest, a district court ``must accord deference to the government's 
predictions about the efficacy of its remedies, and may not require 
that the remedies perfectly match the alleged violations.'' SBC 
Commc'ns, 489 F. Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461 
(noting the need for courts to be ``deferential to the government's 
predictions as to the effect of the proposed remedies''); United States 
v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) 
(noting that the court should grant due respect to the United States' 
prediction as to the effect of proposed remedies, its perception of the 
market structure, and its views of the nature of the case).
    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is ``within 
the reaches of public interest.'' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also 
United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 
1985) (approving the consent decree even though the court would have 
imposed a greater remedy). To meet this standard, the United States 
``need only provide a factual basis for concluding that the settlements 
are reasonably adequate remedies for the alleged harms.'' SBC Commc'ns, 
489 F. Supp. 2d at 17.
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its Complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459. Because the ``court's 
authority to review the decree depends entirely on the government's 
exercising its prosecutorial discretion by bringing a case in the first 
place,'' it follows that ``the court is only authorized to review the 
decree itself,'' and not to ``effectively redraft the complaint'' to 
inquire into other matters that the United States did not pursue. Id. 
at 1459-60. As this Court recently confirmed in SBC Communications, 
courts ``cannot look beyond the complaint in making the public interest 
determination unless the complaint is drafted so narrowly as to make a 
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in antitrust 
enforcement, adding the unambiguous instruction that ``[n]othing in 
this section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. 16(e)(2). The language wrote into the statute 
what Congress intended when it enacted the Tunney Act in 1974, as 
Senator Tunney explained: ``[t]he court is nowhere compelled to go to 
trial or to engage in extended proceedings which might have the effect 
of vitiating the benefits of prompt and less costly settlement through 
the consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement 
of Senator Tunney). Rather, the procedure for the public interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11.\4\
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    \4\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) 
`61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing of corrupt 
failure of the government to discharge its duty, the Court, in 
making its public interest finding, should * * * carefully consider 
the explanations of the government in the competitive impact 
statement and its responses to comments in order to determine 
whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, 93d Cong., 1st Sess., at 6 
(1973) (``Where the public interest can be meaningfully evaluated 
simply on the basis of briefs and oral arguments, that is the 
approach that should be utilized.'').
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VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

    Dated: November 14, 2008.
Mitchell H. Glende, Esq.
U.S. Department of Justice, Antitrust Division, Litigation I Section, 
1401 H Street, NW., Suite 4000, Washington, DC 20530, (202) 353-3106.

Appendix A

Definition of Herfindahl-Hirschman Index (``HHI'')

    ``HHI'' means the Herfindahl-Hirschman Index, a commonly accepted 
measure of market concentration. It is calculated by squaring the 
market share of each firm competing in the market and then summing the 
resulting numbers. For example, for a market consisting of four firms 
with shares of 30 percent, 30 percent, 20 percent, and 20 percent, the 
HHI is 2600 (30\2\ + 30\2\ +20\2\ + 20\2\ = 2600). The HHI takes into 
account the relative size distribution of the firms in a market and 
approaches zero when a market consists of a large number of small 
firms. The HHI increases both as the number of firms in the market 
decreases and as the disparity in size between those firms increases.
    Markets in which the HHI is between 1000 and 1800 points are 
considered to be moderately concentrated, and those in which the HHI is 
in excess of 1800 points are considered to be highly concentrated. See 
Horizontal Merger Guidelines 1.51 (revised Apr. 8, 1997). Transactions 
that increase the HHI by more than 100 points in concentrated markets 
presumptively raise antitrust concerns under the guidelines issued by 
the U.S. Department of Justice and Federal Trade Commission. See id.

[FR Doc. E8-27970 Filed 11-24-08; 8:45 am]

BILLING CODE 4410-11-P