US beer drinkers may be forced to dig a little deeper for their favorite brew later this year.
As regulators and Anheuser-Busch InBev officially ended their antitrust legal battle yesterday, a key block on higher beer prices was removed.
Without the block, experts said yesterday, beer prices are more likely to go up this year.
“The Justice Department is hoping that [by creating] an independent competitor, they will keep prices low, but it is very possible they will look to maximize the profits,” said a DC source close to regulators.
The block came off as A-B and the Justice Department filed papers in court ending Washington’s opposition to the $20.1 billion buy of Mexico’s Grupo Modelo by A-B.
Under the deal, ownership of Modelo’s US brands, including Corona and Modelo, will switch to Constellation Brands.
The brands had been owned by Crown Imports, which is owned by Grupo Modelo and Constellation.
US regulators said the sale of the brands to an independent Constellation would save beer drinkers plenty.
“If this settlement makes just a 1 percent difference in prices, US consumers will save almost $1 billion a year,” DOJ Antitrust Chief Bill Baer said in a statement. But that 1 percent savings could be calculated off higher prices — hardly a bargain.
Experts said beer prices were more likely to rise because Grupo Modelo will no longer control the Corona and Modelo brands.
Under a now-defunct deal, Grupo Modelo could have exercised an option at the end of 2013 to acquire in 2016 the half of Crown it did not already own.
So, it kept Modelo’s US prices flat, partially so it could exercise that option at a relatively low price, sources following the situation said.
Justice, in its January complaint to block A-B’s buy of Modelo, said it was Crown that kept US beer prices low.
“As the two largest brewers, A-B and MillerCoors often find it more profitable to follow each other’s prices than to compete aggressively for market share by cutting price,” the DOJ alleged.
In contrast, since 2008, Modelo has resisted price hikes led by A-B.
The DOJ also alleged, “A-B internal documents acknowledge that Modelo has put ‘increasing pressure’ on A-B by pursuing a competitive strategy directly at odds with A-B’s well-established practice of leading prices upward.”
Crown Imports partner Constellation Brands objected to the price war.
“In August 2011,” the DOJ said, “Constellation’s Managing Director wrote to Crown’s CEO: ‘Since A-B has already announced an October general price increase I was wondering if you are considering price increases for the Modelo portfolio? . . . From a positioning and image perspective I believe it would be a mistake to allow the [price] gaps to be narrowed.’”
Modelo resisted Constellation’s requests to raise prices.
Now, Constellation will be in control — and prices could be set to jump.
A Constellation spokeswoman told The Post yesterday, “We have no comment on how [the acquisition] will impact pricing.”
The DOJ, while stopping A-B from buying Modelo in the US, has little authority to dictate prices, sources said.