Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 10279 

1The merger closed on November 14, 2008. In 

keeping with the United States’ standard practice, 

neither the Stipulation nor the proposed Final 

Judgment prohibited the closing of the merger. See 

ABA Section of Antitrust Law, Antitrust Law 

Developments 406 (6th ed. 2007) (noting that ‘‘[t]he 

Federal Trade Commission (as well as the 

Department of Justice) generally will permit the 

underlying transaction to close during the notice 

and comment period’’). Such a prohibition could 

interfere with many time-sensitive deals and 

prevent or delay the realization of substantial 

efficiencies. 

2The Divestiture Assets do not include certain 

assets of IUSA (e.g., books, records, and data) that 

relate solely to the sale of non-Labatt brand beer. 

See Proposed Final Judgment II.F(iii), (iv). 

notice, and to authorize the 

administrative law judge and the 

Commission, without further notice to 

the respondent, to find the facts to be as 

alleged in the complaint and this notice 

and to enter an initial determination 

and a final determination containing 

such findings, and may result in the 

issuance of an exclusion order or a cease 

and desist order or both directed against 

the respondent. 

Issued: March 5, 2009. 

By order of the Commission. 

Marilyn R. Abbott, 

Secretary to the Commission. 

[FR Doc. E9–5016 Filed 3–9–09; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF JUSTICE 

Antitrust Division 

United States v. InBev NV/SA, InBev 

USA LLC, and Anheuser-Busch 

Companies, Inc.; Response to Public 

Comments on the Proposed Final 

Judgment 

Pursuant to the Antitrust Procedures 

and Penalties Act, 15 U.S.C. 16(b)–(h), 

the United States hereby publishes the 

public comments received on the 

proposed Final Judgment in United 

States v. InBev NV/SA, InBev USA LLC, 

and Anheuser-Busch Companies, Inc., 

Civil Action No. 1:08–cv–1965 and the 

response to the comments. On 

November 14, 2008, the United States 

filed a Complaint alleging that the 

proposed merger between InBev NV/SA 

(‘‘InBev’’) and Anheuser-Busch 

Companies, Inc. would violate Section 7 

of the Clayton Act, 15 U.S.C. 18 by 

substantially reducing competition for 

the 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 

InBev USA LLC d/b/a Labatt USA and 

grant a perpetual license to the acquirer 

to brew and sell Labatt brand beer for 

consumption throughout the United 

States. Pursuant to the Antitrust 

Procedures and Penalties Act, 15 U.S.C. 

16(b)–(h), public comment was invited 

within the statutory 60-day comment 

period. Copies of the Complaint, 

proposed Final Judgment, Competitive 

Impact Statement, Public Comments, 

the United States’ Response to the 

Comments, and other materials are 

currently available for inspection in 

Suite 1010 of the Antitrust Division, 

Department of Justice, 450 5th Street, 

NW., Washington, DC 20530, telephone: 

(202) 514–2481, on the Department of 

Justice’s website (http://www.usdoj.gov/ 

atr), and the Office of the Clerk of the 

United States District Court for the 

District of the District of Columbia, 333 

Constitution Avenue, NW., Washington, 

DC 20001. Copies of any of these 

materials may be obtained upon request 

and payment of a copying fee set by 

Department of Justice Regulations. 

J. Robert Kramer II, 

Director of Operations, Antitrust Division. 

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 NO: 1:08–cv–01965 (JR) 

JUDGE: Robertson, James 

Response of Plaintiff United States To 

Public Comments On the Proposed 

Final Judgment 

Pursuant to the requirements of the 

Antitrust Procedures and Penalties Act 

(‘‘APPA’’ or ‘‘Tunney Act’’), 15 U.S.C. 

16(b)–(h), the United States hereby files 

comments received from members of the 

public concerning the proposed Final 

Judgment in this case and the responses 

by the United States to these comments. 

The United States will move the Court 

for entry of the proposed Final 

Judgment after the public comments and 

this Response have been published in 

the Federal Register, pursuant to 15 

U.S.C. 16(d). 

The United States filed a civil 

antitrust Complaint under Section 15 of 

the Clayton Act, 15 U.S.C. 25, on 

November 14, 2008, alleging that the 

proposed merger of InBev N.V./S.A. 

(‘‘InBev’’) and Anheuser-Busch 

Companies, Inc. (‘‘Anheuser-Busch’’) 

would violate Section 7 of the Clayton 

Act, 15 U.S.C. 18. Simultaneously with 

the filing of the Complaint, the United 

States filed a proposed Final Judgment 

and a Hold Separate Stipulation and 

Order (‘‘Stipulation’’) signed by the 

United States and Defendants 

consenting to the entry of the proposed 

Final Judgment after compliance with 

the requirements of the Tunney Act.1

Pursuant to those requirements, the 

United States filed a Competitive Impact 

Statement (‘‘CIS’’) in this Court on 

November 14, 2008; published the 

proposed Final Judgment and CIS in the 

Federal Register on November 25, 2008, 

see 73 FR 71682 (2008); and published 

summaries of the terms of the proposed 

Final Judgment and CIS, together with 

directions for the submission of written 

comments relating to the proposed Final 

Judgment, in The Washington Post for 

seven days beginning on December 7, 

2008, and ending on December 13, 2008. 

The 60-day period for public comments 

ended on February 11, 2009, and the 

United States received four comments 

as described below and attached hereto. 

I. The United States’ Investigation And 

The Proposed Final Judgment 

On July 13, 2008, InBev and 

Anheuser-Busch entered into an 

agreement, whereby InBev agreed to 

acquire all of the voting securities of 

Anheuser-Busch. The United States 

Department of Justice (the 

‘‘Department’’) conducted an extensive, 

detailed investigation into the 

competitive effects of the proposed 

transaction. As part of this investigation, 

the Department obtained and 

considered more than 500,000 pages of 

material. The Department deposed 

officials of Anheuser-Busch and Inbev 

and interviewed beer wholesalers, retail 

customers, brewers, and other 

individuals with knowledge of the 

industry. 

After conducting a detailed analysis 

of the acquisition, the Department 

concluded that the combination of 

InBev and Anheuser-Busch likely would 

substantially lessen competition for the 

sale of beer in the Buffalo, Rochester, 

and Syracuse, New York, areas. In 

contrast to InBev’s small (less than 2 

percent) share in most parts of the 

country, InBev’s Labatt brand accounts 

for a significant portion of beer sales in 

the Buffalo, Rochester, and Syracuse 

areas. Anheuser-Busch beers and 

InBev’s Labatt brand beers collectively 

account for over 40 percent of the total 

beer sales in the Buffalo, Rochester, and 

Syracuse areas. 

As more fully explained in the CIS, 

the Stipulation and proposed Final 

Judgment in this case are designed to 

preserve competition in the sale of beer 

in the Buffalo, Rochester, and Syracuse 

areas by requiring InBev to divest InBev 

USA d/b/a Labatt USA (‘‘IUSA’’) 2 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 

10280 Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 

3The 2004 amendments substituted ‘‘shall’’ for 

‘‘may’’ in directing relevant factors for courts 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). 

States (‘‘Divestiture Assets’’). See 

Proposed Final Judgment II.F. The 

Stipulation and proposed Final 

Judgment also require InBev to take 

several steps to assist the acquirer in 

providing prompt and effective 

competition in the Buffalo, Rochester, 

and Syracuse areas, including offering a 

transitional supply agreement to the 

acquirer. Id. at J. InBev must also 

provide transition support services as 

are reasonably necessary for the acquirer 

to operate the Divestiture Assets. Id. at 

H. 

In the Department’s judgment, the 

divestiture of InBev USA and the right 

to brew and sell Labatt brand beer for 

consumption in the United States, along 

with the other requirements contained 

in the Stipulation and proposed Final 

Judgment, are sufficient to remedy the 

anticompetitive effects identified in the 

Complaint. 

II. Standard of Judicial Review 

Upon the publication of the 

Comments and this Response, the 

United States will have fully complied 

with the Tunney Act and will move for 

entry of the proposed Final Judgment as 

being ‘‘in the public interest.’’ 15 U.S.C. 

16(e)(1), as amended. 

The Tunney Act states that, in making 

that determination, the Court shall 

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); see generally 

United States v. AT&T Inc., 541 F. 

Supp. 2d 2, 6 n.3 (D.D.C. 2008) (listing 

factors that the Court must consider 

when making the public-interest 

determination); United States v. SBC 

Commc’ns, Inc., 489 F. Supp. 2d 1, 11 

(D.D.C. 2007) (concluding that the 2004 

amendments to the Tunney Act 

‘‘effected minimal changes’’ to scope of 

review under Tunney Act, leaving 

review ‘‘sharply proscribed by 

precedent and the nature of Tunney Act 

proceedings’’).3

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 

United States v. Microsoft Corp., 56 F.3d 

1448, 1458–62 (D.C. Cir. 1995). 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. 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); 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’ ’’). 

The government is entitled to broad 

discretion to settle with defendants 

within the reaches of the public interest. 

AT&T Inc., 541 F. Supp. 2d at 6. In 

making its public-interest 

determination, 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). 

Court approval of a consent decree 

requires a standard more flexible and 

less strict than that appropriate to court 

adoption of a litigated decree following 

a finding of liability. ‘‘[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, rather than 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. 

Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 10281 

4See 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.’’). 

5The Missouri Plaintiffs filed their complaint on 

September 10, 2008, alleging that the merger would 

eliminate InBev as a potential competitor to 

Anheuser-Busch and thereby lessen competition in 

a relevant market consisting of the entire United 

States. Nearly two months later, Missouri Plaintiffs 

filed a motion for a preliminary injunction. See 

Ginsberg v. InBev SA/NV, No. 4:08CV01375, 2008 

WL 4965859, at *1 (E.D. Mo. Nov. 18, 2008). The 

Missouri District Court denied the motion, holding 

that Missouri Plaintiffs’ ‘‘characterization [of InBev] 

as a perceived potential or actual potential 

competitor in the U.S. beer market [is] purely 

speculative and the evidence presented is 

insufficient to warrant granting [Missouri] 

Plaintiffs’ Motion for Preliminary Injunction or 

holding a hearing regarding their Motion.’’ Id. at *4. 

The court held further that ‘‘the evidence presented 

demonstrates that it is overwhelmingly likely that 

Plaintiffs cannot succeed on the merits of their case 

* * *. ’’ Id. 

In addition to filing a complaint in the Eastern 

District of Missouri, Missouri Plaintiffs sought to 

intervene in these Tunney Act proceedings ‘‘for the 

purpose of challenging the merger.’’ Missouri 

United States District Court Plaintiffs’ Motion to 

Intervene, filed Jan. 14, 2009, 1. The Court denied 

their motion to intervene. Order, dated Feb. 3, 2009. 

In its 2004 amendments to the 

Tunney Act, 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 

amendments codified what Congress 

intended when it passed the Tunney 

Act in 1974, as Senator Tunney then 

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

III. Summary of Public Comments and 

the United States’ Response 

During the 60-day comment period, 

the United States received comments 

from (1) ten individuals who filed a 

complaint in the United States District 

Court for the Eastern District of Missouri 

asking the court to enjoin InBev’s 

acquisition of Anheuser-Busch 

(‘‘Missouri Plaintiffs’’) 5; (2) Esber 

Beverage Company, RL Lipton Co., and 

Tri-County Distributing Co. (‘‘Ohio 

Distributors’’); (3) Onondaga Beverage 

Corporation, Rochester Beer & Beverage 

Corp., McCraith Beverages, Owasco 

Beverage Inc., Seneca Beverage Corp, 

and Rocco J. Testani Inc. (‘‘New York 

Distributors’’); and (4) Tri-County 

Beverage Company. The comments are 

attached to this Response. 

The commenters raise two main 

concerns: (A) That the United States 

should have alleged and remedied harm 

to competition in a nationwide 

geographic market, rather than the 

Buffalo, Rochester, and Syracuse, New 

York, markets alleged in the United 

States’ Complaint; and (B) that the 

proposed Final Judgment should 

contain additional requirements to 

ensure that competition is preserved in 

the Buffalo, Rochester, and Syracuse, 

New York, markets. After reviewing the 

comments, the United States has 

determined that the proposed Final 

Judgment remains in the public interest. 

A. Missouri Plaintiffs’ Comment that the 

United States Should Have Alleged and 

Remedied Additional Competitive 

Concerns 

1. Summary of Comment 

The Missouri Plaintiffs argue that ‘‘the 

Complaint is too narrow [and] the 

proposed remedies inadequate,’’ 

because the United States did not 

challenge the merger under a ‘‘potential 

competition’’ theory and did not 

challenge the legality of a November 

2006 import agreement between InBev 

and Anheuser-Busch. Missouri Plaintiffs 

Comment at 3–4. In other words, they 

assert that the United States should 

have pled and remedied anticompetitive 

effects asserted by the Missouri 

Plaintiffs that are neither alleged nor 

related to the competitive harms 

identified in the United States’ 

Complaint. Missouri Plaintiffs also 

assert that this Court should ‘‘inquire’’ 

about why the United States did not 

produce any ‘‘determinative’’ 

documents, as defined by the Tunney 

Act, 15 U.S.C. 16(b), and suggest that an 

import agreement between InBev and 

Anheuser-Busch is in fact such a 

determinative document. Missouri 

Plaintiffs Comment at 15–16. 

2. The United States’ Response 

a. Competitive Concerns Not Addressed 

in the Complaint 

Missouri Plaintiffs’ comment that the 

United States should have alleged harm 

to competition for the sale of beer in a 

nationwide market concerns matters 

that are outside the scope of this APPA 

proceeding because neither claimed 

harm relates to the harms alleged in the 

United States’ Complaint. As explained 

by this Court, in a Tunney Act 

proceeding, the district court should not 

second-guess the prosecutorial 

decisions of the Department regarding 

the nature of the claims brought in the 

first instance; ‘‘rather, the court is to 

compare the complaint filed by the 

United States with the proposed consent 

decree and determine whether the 

proposed decree clearly and effectively 

addresses the anticompetitive harms 

initially identified.’’ United States v. 

Thomson Corp., 949 F. Supp. 907, 913 

(D.D.C. 1996); accord Microsoft, 56 F.3d 

at 1459 (in APPA proceeding, ‘‘district 

court is not empowered to review the 

actions or behavior of the Department of 

Justice; the court is only authorized to 

review the decree itself’’); BNS, 858 

F.2d at 462–63 (‘‘the APPA does not 

authorize a district court to base its 

public interest determination on 

antitrust concerns in markets other than 

those alleged in the government’s 

complaint’’). This Court has held that ‘‘a 

district court is not permitted to ‘reach 

beyond the complaint to evaluate claims 

that the government did not make and 

to inquire as to why they were not 

made.’ ’’ SBC Commc’ns, 489 F. Supp. 

2d at 14 (quoting Microsoft, 56 F.3d at 

1459). 

Further, the Missouri Plaintiffs’ 

suggestion that the 2004 Amendments 

to the Tunney Act require a more 

extensive review of the United States’ 

exercise of its prosecutorial judgment, 

Missouri Plaintiffs Comment at 6–7, 

conflicts with this Court’s holding in 

SBC Communications. In SBC 

Communications, this Court held that ‘‘a 

close reading of the law demonstrates 

that the 2004 amendments effected 

minimal changes, and that this Court’s 

scope of review remains sharply 

proscribed by precedent and the nature 

of [APPA] proceedings.’’ SBC 

Commc’ns, 489 F. Supp. 2d at 11. This 

Court continued that because ‘‘review 

[under the 2004 amendments] is focused 

on the ‘judgment,’ it again appears that 

the Court cannot go beyond the scope of 

the complaint.’’ Id. 

In short, the Tunney Act, as amended 

in 2004, requires the Court to evaluate 

the effect of the ‘‘judgment upon 

competition’’ as alleged in the 

10282 Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 

6Missouri Plaintiffs also assert that ‘‘the result of 

the [proposed Final Judgment] would be to 

eliminate InBev, and its LaBatt brands, from 

competing head to head with Anheuser Busch 

Budweiser brands,’’ Missouri Plaintiffs Comment at 

4, but make no attempt to explain why the proposed 

divestiture, which requires the divestiture of all of 

InBev’s assets related to the sale of Labatt brand 

beers in the United States, would not preserve 

head-to-head competition between Labatt brands 

and Budweiser brands. 

Complaint, in this case, competition in 

the market for beer in the Buffalo, 

Rochester, and Syracuse, New York, 

areas. See 15 U.S.C. 16(e)(1)(b). Because 

the United States did not allege that 

InBev’s acquisition of Anheuser-Busch 

would cause harm in additional 

markets, it is not appropriate for the 

Court to seek to determine whether the 

acquisition will cause anticompetitive 

harms in other regions of the country.6

b. Determinative Documents 

In its CIS, the United States certified 

that there were no determinative 

documents within the meaning of the 

Tunney Act, 15 U.S.C. 16(b). CIS at 16. 

Missouri Plaintiffs appear to argue that 

this certification is wrong, suggesting 

that the United States failed to submit 

determinative documents including 

‘‘the Import Agreement entered into by 

the Defendants in November 2006,’’ 

Missouri Plaintiffs Comment at 16–17, 

which, in their view, is an illegal 

agreement or somehow relates to the 

theory of harm they alleged in their case 

against Defendants that is pending 

before the United States District Court 

for the Eastern District of Missouri. 

There is no support for Missouri 

Plaintiffs’ argument. The Tunney Act’s 

notice and comment provision requires 

the government to make available to the 

public copies of the proposed consent 

decree, and ‘‘any other materials and 

documents which the United States 

considered determinative in formulating 

such proposal.’’ 15 U.S.C. 16(b). In 

Massachusetts School of Law of 

Andover v. United States, 118 F.3d 776, 

785 (D.C. Cir. 1997) (‘‘MSL’’), the court 

held that ‘‘the Tunney Act does not 

require that the government give access 

to evidentiary documents gathered in 

the course of an investigation 

culminating in settlement.’’ The United 

States had argued that the statute 

referred to documents ‘‘that 

individually had a significant impact on 

the government’s formulation of relief— 

i.e., on its decision to propose or accept 

a particular settlement.’’ Id. at 784 

(quoting brief of the United States). The 

Court concluded that the statutory 

language ‘‘seems to point toward the 

government’s view * * * and confines 

section 16(b) at the most to documents 

that are either ‘smoking guns’ or the 

exculpatory opposite.’’ Id.; accord 

United States v. Microsoft, 215 F. Supp. 

2d 1, 11 (D.D.C. 2002) (holding that the 

Tunney Act ‘‘makes clear that the 

calculus by which documents are to be 

deemed ‘determinative’ is left entirely to 

the United States’’ and calls only for 

‘‘documents ‘which the United States 

considered determinative,’ not 

documents which the Court or other 

parties would consider determinative’’). 

The court added that ‘‘[t]he legislative 

history in fact supports the 

government’s still narrower reading.’’ 

MSL, 118 F.3d at 784. 

As stated, the United States certified 

to the Court in the CIS that there were 

no determinative documents. CIS at 16. 

It did so because there was no 

document, including the InBev/ 

Anheuser-Busch import agreement, that 

was a ‘‘smoking gun or its exculpatory 

opposite,’’ or of similar nature, and 

because no document individually had 

a significant effect on the United States’ 

formulation of the proposed Final 

Judgment. Accordingly, the Court 

should reject Missouri Plaintiffs’ 

unsupported suggestion that the United 

States failed to submit determinative 

documents. 

B. Comments That the Proposed Final 

Judgment Be Modified To Contain 

Additional Requirements for Defendants 

and the Acquirer 

1. Summary of Comments 

New York Distributors, Ohio 

Distributors, and Tri-County Beverage 

state that the proposed Final Judgment 

should be modified to require that 

Labatt brand beer sold in the United 

States be brewed in Canada, to preserve 

its identity as a Canadian import. New 

York Distributors Comment at 5; Ohio 

Distributors Comment at 5; Tri-County 

Beverage Comment at 2. Ohio 

Distributors state that the proposed 

Final Judgment should be modified 

further to require the purchaser of the 

Divestiture Assets to maintain the 

current distributor network for a 

‘‘commercially reasonable time period’’ 

and to give them the option to purchase 

Labatt brand beer from InBev beyond 

the three-year period provided for in the 

proposed Final Judgment. Ohio 

Distributors Comment at 2, 5. Finally, 

Ohio Distributors and Tri-County 

Beverage state that to be a viable 

competitor, the purchaser of the 

Divestiture Assets must remain priced at 

domestic beer levels, maintain brand 

(e.g., Labatt Blue Light) and packaging 

offerings (e.g., thirty packs), and 

continue to invest in marketing and 

promotion. Ohio Distributors Comment 

at 6; Tri-County Beverage Comment at 2 

(concurring with Ohio Distributors’ 

comments). 

2. The United States’ Response 

a. The Proposed Final Judgment Is 

Sufficient To Eliminate the Alleged 

Anticompetitive Effects 

The modifications proposed by Ohio 

Distributors, New York Distributors, and 

Tri-County Beverage are not necessary 

to ensure that competition will remain 

in the market alleged in the Complaint. 

The proposed Final Judgment imposes 

extensive requirements on Defendants 

that are sufficient to eliminate the 

alleged anticompetitive effects. First, the 

proposed Final Judgment requires 

Defendants to divest all of the assets of 

IUSA (except for a narrow class of assets 

unrelated to the brewing, promotion, 

marketing or distribution of Labatt 

brand beers) 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. Proposed Final 

Judgment II.F. 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. Id. 

Second, 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. Id. 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. 

* * *’’ Id. at II.M. 

Third, 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 

Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 10283 

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. Id. at II.F, IV.H, IV.J. 

Fourth, to ensure that the Acquirer 

can continue to develop, grow, and 

improve the Labatt brand over time, 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). Id. 

at II.J. 

Fifth, Defendants are required to 

satisfy the United States in its sole 

discretion that the proposed Acquirer of 

the Divestiture Assets will operate them 

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. Id. at IV.I. In 

approving the Acquirer, the United 

States may appropriately consider the 

issues raised by the distributors’ 

comments. 

b. The Proposed Modifications Could 

Reduce Competition 

Not only are the additions to the 

proposed Final Judgment recommended 

by the New York Distributors, Ohio 

Distributors, and Tri-County Beverage 

not needed to supplement the already 

extensive requirements and safeguards 

in the proposed Final Judgment, as the 

United States now explains, they could 

in fact reduce the ability of the Acquirer 

of the Divestiture Assets to compete. 

i. Requirement To Brew Labatt in 

Canada 

The distributor groups argue that the 

proposed Final Judgment should be 

modified to require the purchaser of the 

divested assets to maintain Labatt as a 

Canadian import. They allege that ‘‘[t]he 

Labatt Brand derives much of its cachet 

from its status as a Canadian import,’’ 

Ohio Distributors Comment at 2, and 

that brewing Labatt in the United States 

‘‘would make it impossible to maintain 

the Labatt Brand as a competitive 

brand,’’ New York Distributors 

Comment at 4. 

The proposed Final Judgment allows 

the Acquirer of the Divestiture Assets to 

brew Labatt brand beer in Canada, but 

also gives the Acquirer the flexibility to 

brew the beer in the United States, 

Proposed Final Judgment II.F(i)(A), so as 

not to limit the Acquirer’s ability to 

adopt the most cost-effective strategies. 

Brewing Labatt brand beer in the United 

States may enable the Acquirer to offer 

lower prices. Beer can be segmented by 

price into four categories: sub-premium 

(e.g., Busch); premium (e.g., Budweiser); 

super-premium (e.g., Michelob); crafts/ 

import (e.g., Sam Adams, Heineken). 

Imports generally are priced 

significantly higher than premium. 

Labatt brands, however, are priced at 

premium levels. The distributor 

commenters recognize that premium 

pricing is an important part of Labatt’s 

success. See, e.g., Ohio Distributors 

Comment at 6. Modifying the Final 

Judgment to require the Acquirer of the 

Divestiture Assets to brew Labatt brand 

beer in Canada, could impair the 

Acquirer’s ability to maintain premiumlevel prices over time. In contrast, the 

proposed Final Judgment gives the 

Acquirer the option to choose a brewing 

location that will maximize its ability to 

compete with other premium beers. 

ii. Requirement To Maintain Existing 

Distributor Network 

The Ohio Distributors argue that the 

Final Judgment should ‘‘require the 

Acquirer [of the Divestiture Assets] to 

keep the Labatt Distributors for a 

commercially reasonable period of 

time.’’ Ohio Distributor Comment at 8. 

Without such a requirement, they claim, 

the divestiture could precipitate 

consolidation among beer distributors, 

resulting in higher prices to consumers. 

Id. at 2. 

Such a requirement is not necessary 

to preserve the current level of 

competition and could inhibit the 

Acquirer’s ability to compete. The 

requirement in the proposed Final 

Judgment that InBev sell to the Acquirer 

all of its existing U.S. wholesaler and 

distributor agreements for Labatt brand 

beer (along with the supply agreement), 

Proposed Final Judgment II.F(iii)(B), 

IV.J, will prevent interruptions in the 

distribution of Labatt beer in the United 

States. If these wholesaler and 

distributor agreements are the most 

efficient mechanism to distribute Labatt 

brand beer, then the Acquirer of the 

Divestiture Assets will have a strong 

incentive to keep them. If they are not, 

or if market conditions change, then the 

proposal of the commentators may 

reduce the ability of the Acquirer to sell 

Labatt brand beer at competitive prices. 

Moreover, limiting the Acquirer’s ability 

to change distributors could prevent the 

deconcentration of the distributor 

market if, for example, the Acquirer 

desires to switch from a joint Labatt/ 

Anheuser-Busch distributor to a 

distributor with no other major brands. 

iii. Other Competitive Practices 

The Ohio Distributors identify 

additional business practices that they 

believe contribute to the 

competitiveness of the Labatt brand, but 

do not appear to specifically 

recommend that the proposed Final 

Judgment include requirements that the 

Acquirer adhere to these practices. 

Rather, they state that the Division 

should consider the Acquirer’s product 

mix and sales and marketing plans to 

determine that the Acquirer will 

maintain competitive pricing, an 

attractive brand and packaging mix, and 

sufficient spending on promotion. Ohio 

Distributors Comment at 6. The 

requirements of the proposed Final 

Judgment adequately ensure that the 

Acquirer of the Divestiture Assets will 

have the ability and means to 

aggressively market and sell Labatt 

brand beer and to continue to develop 

and grow the brand. As described above, 

the proposed Final Judgment allows the 

Acquirer the flexibility to brew Labatt 

brand beer in the most cost-effective 

location, giving it the ability to maintain 

competitive levels of marketing and 

prices. In addition, the Divestiture 

Assets contains the Labatt brand 

portfolio, which includes ‘‘extensions of 

any one or more of [the Labatt brands] 

* * * as may be developed from time 

to time by the Acquirer.’’ Proposed 

Final Judgment II.J. The proposed Final 

Judgment also requires that Defendants 

demonstrate ‘‘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.’’ Proposed Final Judgment 

IV.I. Finally, before approving the 

divestiture, the United States may 

properly consider the Acquirer’s plans 

for packaging, marketing, and 

promotion. 

IV. Conclusion 

The issues raised in the four public 

comments were among the many 

considered during the United States’ 

extensive and thorough investigation. 

The United States has determined that 

the proposed Final Judgment as drafted 

provides an effective and appropriate 

remedy for the antitrust violations 

alleged in the Complaint, and is 

therefore in the public interest. The 

United States will move this Court to 

enter the proposed Final Judgment after 

the comments and this response are 

published in the Federal Register. 

Dated: February 25, 2009. 

10284 Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 

1These individuals are consumers and 

purchasers of Anheuser-Busch’s beers who in the 

four years prior to the filing of this action by the 

United States Department of Justice, have 

purchased beer produced by one or both of the 

defendants, and each individual expects to 

continue to purchase beer produced by one or both 

of the defendants in the future. 

These individuals have also filed a private 

antitrust action in United States District Court for 

the Eastern District for Missouri, contending that 

the acquisition by InBev NV/SA (‘‘InBev’’) of 

Anheuser-Busch Companies, Inc. (‘‘AnheuserBusch’’) violates Section 7 of the Clayton Act, and 

that they are threatened with loss and damage in 

the form of higher prices, fewer services, fewer 

competitive choices, deterioration of products and 

product diversity, suppression and destruction of 

smaller actual competitors through exclusive 

distribution, full-line forcing, and the like, and 

other anticompetitive effects and consequences that 

may, and most probably will, result from the 

elimination of the actual and potential competition 

of InBev as a result of the acquisition. 

2Additionally, on January 14, 2009, the Missouri 

Plaintiffs filed a Motion for Intervention in this 

case, requesting this Court to allow intervention by 

the Missouri Plaintiffs for the purpose of 

challenging the acquisition as being against the 

public interest and illegal. 

Respectfully Submitted, 

Mitchell H. Glende, 

Trial Attorney, Litigation I Section—Antitrust 

Division, United States Department of Justice, 

1401 H Street, NW., Suite 4000, Washington, 

DC 20530, (202) 353–3106, (202) 307–5802 

(facsimile). 

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 NO: 1:08–cv–01965 (JR) 

JUDGE: Robertson, James 

Notice Regarding Video Exhibit Attachment 

New York Distributors Comment Exhibit O 

(‘‘Exhibit O’’), which is an attachment to the 

United States’ Response to Public Comments 

on the Proposed Final Judgment, is a 

compact disc consisting of nine (9) movies in 

MPEG format. Exhibit O is being maintained 

in the case file in the Clerk’s Office. The 

exhibit will be available for public viewing 

and copying between the hours of 9 a.m. to 

4 p.m., Monday through Friday. 

Dated: February 25, 2009. 

Mitchell H. Glende, 

Trial Attorney, Litigation I Section—Antitrust 

Division, United States Department of 

Justice, 1401 H Street, NW., Suite 4000, 

Washington, DC 20530, (202) 353–3106, (202) 

307–5802 (facsimile). 

January 23, 2009 

Via FedEx Express: 

Joshua H. Soven, Chief, Litigation I Section, 

Antitrust Division, 

Department of Justice, 1404 H Street, NW., 

Suite 4000, Washington, DC 20530, Re: 

Public Comment on United States of 

America v. InBev NV/SA, et al., Case No. 

08–cv–1965–JR. 

Dear Mr. Soven: Pursuant to the Antitrust 

Procedures and Penalties Act, 15 U.S.C. 

16(b)–(h)(‘‘APPA’’ or ‘‘Tunney Act’’), this 

Public Comment is respectfully submitted by 

the following individuals, all citizens of the 

State of Missouri: Marty Ginsburg, Patricia 

Odenbach, Daniel Sayle, Joseph Lott, Terri 

Lott, Ariel Young, Ronald Martin, Sharon 

Martin, William Stage and Barry Ginsburg.1

These individuals (‘‘Missouri Plaintiffs’’) 

request that the Court not enter the Proposed 

Final Judgment, as it is not within the public 

interest. 15 U.S.C. 16(e)(1).2

I. Summary of Public Comment 

Notably, this is the largest cash 

acquisition in the history of the antitrust 

laws. If InBev is allowed to purchase the 

United States’ largest brewer, AnheuserBusch, there no longer would be any 

significant major potential competitor to 

influence pricing and marketing 

practices in the United States anywhere 

near the degree to which InBev, as the 

largest brewer in the world, is able to 

do; the beer market in the United States 

would be controlled by absentee foreign 

owners; consumer welfare and choice 

and the benefits of competition would 

be substantially lessened and tend 

toward the creation of a monopoly; and 

prices would be artificially enhanced 

and raised and extracted without regard 

to supply, demand and competition on 

the merits. 

These Missouri Plaintiffs also 

respectfully submit that under the 

‘‘actual potential competition’’ doctrine 

and the ‘‘perceived potential 

competition’’ doctrine, this Court as part 

of its review under the Tunney Act, 

must conduct an analysis of the 

Defendant InBev’s objective ability to 

enter the target market, either de novo, 

or through a ‘‘toe-hold’’ acquisition. 

After doing so, the Court should reject 

the Proposed Final Judgment. 

The ‘‘actual potential competition’’ 

doctrine seeks to determine whether the 

defendant is a potential market entrant 

and, if so, whether its eventual entry 

would be likely to de-concentrate the 

market or lead to other pro-competitive 

affects, such as increased competition, 

lower prices, better service or higher 

quality standards. 

The ‘‘perceived potential 

competition’’ doctrine looks at whether 

the defendant’s presence on the 

periphery of the market, or ‘‘in the 

wings’’ exerts a present pro-competitive 

impact on the market participants. The 

reasoning underlying this doctrine is the 

current market participants will 

compete hard against one another, 

seeking to prevent the would-be 

competitor from entering. In both cases, 

the doctrines lead to increased 

competition which inures to consumers’ 

benefit. 

In this regard, the position of InBev, 

the largest beer manufacturer in the 

world, is mentioned in the 

Government’s Complaint, but there is no 

mention, much less analysis of the fact 

that InBev has waited in the wings of 

the U.S. beer market. The focus of the 

DOJ’s Complaint is on but one region, in 

New York State where InBev’s Labatt 

brand is in heated competition with 

Anheuser-Busch and MillerCoors. 

Missouri Plaintiffs contend that InBev is 

well-situated as an ‘‘actual potential 

competitor,’’ because the market 

economics are attractive and InBev is 

well-suited to take advantage of them. 

Its entry, Missouri Plaintiffs contend, 

would likely eventually de-concentrate 

the market to consumers’ benefit. 

Missouri Plaintiffs also contend that 

InBev is a ‘‘perceived potential 

competitor,’’ whose presence on the 

periphery of the market currently exerts 

pro-competitive influence on the 

market. 

Nor is there any analysis in the 

Government’s filings about the Import 

Agreement between InBev and 

Anheuser-Busch signed in November 

2006. While mentioned almost in 

passing, there has been no explanation 

about the Import Agreement’s impact on 

the public interest and how it is an 

integral component of the Court’s 

mandatory independent analysis of the 

Complaint, the requested relief, and the 

PFJ. Missouri Plaintiffs submit that this 

is at the genesis of why the Complaint 

is too narrow, the proposed remedies 

inadequate, and the PFJ is inimical to 

the public interest. As we explain 

below, under APPA’s standards of 

review, the Court may properly consider 

the Import Agreement, and its impact, 

and its relationship to the suggested 

remedies in this case. Such evidence is 

in fact part and parcel of an appropriate 

inquiry into the purpose, meaning and 

efficacy of the PFJ. 

As an overview, this Public Comment 

submits the following issues are 

germane to the Court’s consideration of 

whether this Proposed Final Judgment 

falls outside of the public interest. First, 

as noted above, that the Court must 

deny entry of the PFJ under the ‘‘actual 

potential competition’’ doctrine and the 

‘‘perceived potential competition’’ 

doctrine. Notably, in this void of any 

discussion of these doctrines, there are 

also no ‘‘determinative documents’’ 

which have been made available to the 

public as required under the Tunney 

Act, 15 U.S.C. 16(b). 

In conjunction with this, there is a 

corresponding failure of the DOJ to 

address the legality and impact of the 

November 2006 Import Agreement 

between the Defendants, and whether or 

Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 10285 

3Here there has been no showing at all that any 

‘‘independent, viable acquirer’’ can step into the 

shoes of InBev, who the Government claims had 

market shares of 21 percent in Buffalo and 

Rochester and 13 percent in Syracuse market. See 

Competitive Impact Statement at 6, noting that 

‘‘Entry of a new competitor into the marketplace is 

particularly unlikely because a new entrant would 

not possess the highly important brand acceptance 

necessary to succeed.’’ 

4The Tunney Act authorizes the district judge to 

‘‘take testimony of Government officials as the court 

may deem appropriate * * *’’ U.S. v. Microsoft, 56 

F.3d 1448, 1459 (D.C. Cir. 2001), citing 15 U.S.C. 

§ 16(f)(1). Under certain conditions, a Court can 

consider whether the DOJ’s approach is in fact 

suggestive of either ‘‘bad faith or malfeasance.’’ 

United States v. Microsoft supra, 56 F.3d at 1458; 

15 U.S.C. 16(e)(2) (1988). 

not the terms and effects of the Import 

Agreement have an anticompetitive 

impact upon the relevant market or 

markets. Third, even in the three 

separate geographic areas which are the 

subject of the proposed remedy, the 

result of the PFJ would be to eliminate 

InBev, and its LaBatt brands, from 

competing head to head with Anheuser 

Busch Budweiser brands, thereby 

reducing the number of strong market 

competitors while at the same time 

eliminating InBev—the wealthiest and 

most viable potential entrant into those 

markets.3

The record in this action also has 

shed a light on the Government and the 

Defendants’ procedural gamesmanship 

with regard to representations and 

omissions to the District Courts in 

connection with the two-track litigation 

in Missouri District Court and this 

Court, in order to lead these Courts into 

prematurely approving the acquisition. 

In this context, the Court must consider 

the bi-partisan comments of highranking elected officials of the State of 

Missouri condemning the transaction as 

anticompetitive and otherwise against 

the public interest. The Court should 

also exercise its independent evaluation 

of this controversial acquisition in the 

context of the public comments of 

Congress encouraging independent 

determination by the reviewing court 

and the 2008 concerns of the Chairman 

of the House Judiciary Committee Task 

Force on Competition Policy and 

Antitrust Laws questioning the ‘‘hands 

off approach’’ of the Antitrust Division 

concerning mergers. 

II. Procedural History 

1. Pursuant to the Antitrust 

Procedures and Penalties Act, 15 U.S.C. 

16(b)–(h), a Proposed Final Judgment, 

Hold Separate Stipulation and Order 

and Competitive Impact Statement were 

all filed with this Court on November 

14, 2008. 

2. Also on November 14, 2008, the 

United States Department of Justice, 

Antitrust Division, filed a civil antitrust 

Complaint seeking to enjoin the 

proposed acquisition of AnheuserBusch Companies (‘‘Anheuser-Busch’’) 

by InBev N.V./S.A. (‘‘InBev’’). See 

Competitive Impact Statement, Docket 

No. 2 at 1. 

3. The Complaint alleges, inter alia, 

that certain aspects of 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, in 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.’’ 

See DOJ Complaint, ¶¶ 1–7. The DOJ 

also filed a Proposed Final Judgment 

(‘‘PFJ’’), Hold Separate Stipulation and 

Order, Plaintiff United States’ 

Explanation of Consent Decree 

Procedures, and Competitive Impact 

Statement in this Court. (See Docket 

Nos. 1, 2.) 

4. On the evening of November 14, 

2008, this Court signed the DOJ’s Hold 

Separate Stipulation and Order. (Docket 

No. 9.) This Court has not signed the 

Proposed Final Judgment. 

5. Pursuant to 15 U.S.C. 16(b), the 

revised Proposed Final Judgment and 

Competitive Impact Statement were 

published in the Federal Register on 

November 25, 2008, at 73 FR 71682 

(Nov. 25, 2008). 

6. The 60-day comment period 

specified in 15 U.S.C. 16(b) commenced 

on November 25, 2008, 73 FR 71682 

(Nov. 25, 2008), and ends no earlier 

than January 24, 2009. 

III. Summary of Standard of Review 

The Antitrust Procedures and 

Penalties Act of 1974, also known as the 

Tunney Act, directs this Court to 

determine whether entry of the 

Proposed Final Judgment ‘‘is in the 

public interest.’’ 15 U.S.C. 16(e)(1); 

United States v. SBC Communications, 

489 F.Supp.2d 1, 10 (D. D.C. 2007). In 

amending the Tunney Act in 2004, 

Congress was clear that a court should 

be careful to independently weigh the 

statutory factors. See 150 Cong.Rec. 

S3616–14, S3619 (Apr.2, 

2004)(Statements of Senators Hatch and 

Devine), 150 Cong.Rec. H3659–60 (June 

2, 2004)(Statements of Representatives 

Scott and Conyers). 

In making that determination, in 

accordance with 2004 Amendments, 

pursuant to 15 U.S.C. 16(e)(1)(A), the 

Court must consider a number of factors 

including: 

The competitive impact of such judgment 

* * * anticipated effects of alternative 

remedies actually considered * * * 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.’’ 

Under section (B), this Court must also 

consider: 

‘‘The impact of entry of such judgment 

upon competition in the relevant market or 

markets, upon the public generally * * * 

and * * * consideration of the public 

benefit, if any, to be derived from a 

determination of the issues at trial. 

This grants the court wide discretion to 

assure that the judgment is in the public 

interest. The Court is not required, as the DOJ 

has claimed in its Competitive Impact 

Statement, to ‘‘accord deference to the 

government’s predictions about the efficacy 

of its remedies * * *’’ Competitive Impact 

Statement, Docket No. 2 at 14. To the 

contrary, the Tunney Act is designed to 

constrain the Department of Justice from 

entering into settlements that provide DOJ 

with an exit from an antitrust case but do not 

provide the public with a remedy 

commensurate with the defendant’s antitrust 

violations. Indeed, the Court is empowered to 

‘‘take testimony of government officials 4 or 

expert witnesses, appoint a special master or 

expert consultant, authorize participation by 

other parties as amici or intervenors, or ‘take 

such other action in the public interest as the 

court may deem appropriate.’ ’’ United States 

v. SBC Communications, supra, 489 

F.Supp.2d 1, 10–11. 

As we explain below, while the 

Complaint seeks to enjoin the entire 

acquisition, the Proposed Final 

Judgment and Competitive Impact 

Statement focuses only on three 

metropolitan areas in New York State 

(the Buffalo, Rochester, and Syracuse 

areas) and does not provide any relief 

for any other antitrust violations which 

arise from the acquisition. 

At bottom, it appears that while the 

Court must not engage in an 

unrestricted evaluation of what relief is 

appropriate, nor can it act as a ‘‘judicial 

rubber stamp of proposed consent 

decrees.’’ As explained by Senator Kohl 

at the time of the amendments to the 

Tunney Act, there are ‘‘concerns with 

the political influence of large 

companies in these matters.’’ And, as 

stated in United States v. SBC 

Communications, the 2004 amendments 

were intended to ‘‘assure that courts 

undertake meaningful review of 

antitrust consent decrees to assure that 

they are in the public interest and 

analytically sound.’’ 489 F.Supp.2d at 

10. 

It is also noteworthy that while a 

Court may not require that remedies 

‘‘perfectly match the alleged violations’’ 

a Court is also not obligated to accept 

on its face everything that is or is not 

in the Complaint. Nor must the Court 

bless a proposed settlement that as some 

cases have noted, makes a ‘‘mockery of 

10286 Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 

judicial power.’’ Here, the DOJ antitrust 

Complaint seeks to enjoin the entire 

InBev/Anheuser-Busch acquisition, but 

the proposed settlement addresses the 

sale and distribution of beer in only 

three discreet metropolitan regions in 

New York State—Rochester, Buffalo and 

Syracuse. There is no remedy for the 

rest of the entire country, no 

consideration of the elimination of 

InBev as a potential entrant into the 

relevant market or markets, and under 

applicable standards for the Tunney 

Act, this Court may properly consider if 

the Government’s Complaint is too 

narrowly drawn. 

Further, the Court must also consider 

if the Government’s action is so limited 

and the remedy so unsatisfactory as to 

amount to a virtual sham, thereby 

making it both against the public 

interest as well as a mockery of judicial 

power. Further, were obvious 

anticompetitive injury to occur under 

this settlement in relevant markets or 

upon the public generally, or the 

enforcement mechanism appears to be 

inadequate or otherwise ineffective, 

then the Court may reject the Proposed 

Final Judgment. 

IV. The Pending Missouri Action 

On September 10, 2008, these 

Missouri Plaintiffs filed a private 

antitrust suit in the District Court for the 

Eastern District of Missouri, brought 

under Section 16 of the Clayton 

Antitrust Act (15 U.S.C. 26) alleging a 

violation of Section 7 of the Clayton 

Antitrust Act, 15 U.S.C. 18. See 

Missouri Plaintiffs’ Motion for 

Intervention filed January 14, 2009, 

Docket No. 13, (hereinafter the ‘‘Motion 

for Intervention’’), Schwartz Decl., 

Docket No. 13–3, Exh. 1, Complaint, 

Ginsburg, et al., v. InBev NV/SA, and 

Anheuser-Busch Companies, Inc., Case 

No.: 08–cv–01375–JCH. The Missouri 

Plaintiffs’ Complaint was filed two 

months before the Department of Justice 

filed its action in the present case. To 

our knowledge, neither the DOJ nor the 

Defendants in this action advised this 

Court of the pendency of that Missouri 

action, the alleged market definition, the 

pricing impact immediately following 

the announcement of the decision and, 

more generally, the underlying legal and 

factual basis for the claims asserted. 

In the Missouri Action, the Missouri 

Plaintiffs seek a permanent injunction to 

prohibit the acquisition of AnheuserBusch, the largest brewer in the United 

States, by InBev, the largest brewer in 

the world, for $52 billion, the largest 

cash payment ever offered to purchase 

a competitor. Following a Rule 16 

conference held on January 5, 2009, the 

Missouri District Court has set a trial 

date for February 1, 2010, also leaving 

open the possibility for an earlier trial. 

As noted above, on January 20, 2009 

filed under seal, an Emergency Motion 

for Injunction Pending Appeal in the 

United States Court of Appeals for the 

Eighth Circuit. 

V. Statement of Facts and Specific 

Comments on the Complaint, Relief 

Requested and Proposed Final 

Judgment 

A. The U.S. Beer Market 

Beer is a line of commerce and a 

relevant product market within the 

meaning of section 7 of the Clayton Act. 

Docket No. 1, Complaint, ¶ 14. Beer is 

sold to consumers through a three-tier 

market system throughout the United 

States. Complaint, ¶ 15. In the United 

States, the largest and the most 

profitable beer selling market in the 

world and InBev’s most targeted market, 

Anheuser-Busch, with 50% of the 

market, is the undisputed United States 

leader, with more than 21⁄2 times as 

large as its closest United States 

competitor, SABMiller (formed from the 

combine of South Africa Brewing and 

Miller), which has 18% of the market; 

41⁄2 times as large as the third largest 

competitor in the United States, 

MolsonCoors (formed from the combine 

of Canadian Molson and Coors), which 

has 11% of the market; 31⁄2 times as 

large as all imported beers, which have 

a total of 14.5% of the market; and 7 

times as large as all domestic craft or 

microbrewery beers, which have a total 

of 7% of the market. 

Recently, the number two and number 

three competitors in the United States, 

SABMiller and MolsonCoors, combined 

their American businesses, and now 

account for 30% of the market. 

Consequently, with Anheuser-Busch’s 

50% of the United States market, more 

than 80% (some analysts say 90%) of 

the production and sale of beer in the 

United States is controlled by only two 

companies. The United States market is 

substantially more than simply ‘‘highly 

concentrated,’’ as measured by the 

objective standards of the universally 

accepted Herfindahl-Hersch Index 

(‘‘HHI’’). (HHI measures and grades 

market concentration by adding the 

squared market share percentages of 

each of the competitors in the market.) 

The threshold for ‘‘highly concentrated’’ 

is under Department of Justice 

Guidelines, a value of 1800. An 

additional 100 points causes great 

concern among antitrust enforcers. Here, 

the market substantially exceeds that 

number, especially since the recent 

marketing combination of SABMiller 

and MolsonCoors in the United States. 

In 2007, the U.S. Beer Market carried an 

HHI of 3251, indicating its extraordinary 

concentration. 

1. Anheuser-Busch 

Anheuser-Busch has the country’s 

largest network of independent 

distributors/wholesalers, numbering 

approximately 600. Almost all of the 

distributors are independent, and 

operate under exclusive agreements 

with Anheuser-Busch in which they 

agree not to deal with any products of 

any competitor of Anheuser-Busch and 

not to distribute any products outside of 

their own designated territories. 

Anheuser-Busch sells nearly 70 percent 

of the company’s volume through 

wholesalers. Anheuser-Busch also owns 

13 company-owned distributors/ 

wholesale operations. Anheuser-Busch 

sold 104.4 million barrels of beer to 

United States wholesalers in 2007. The 

most influential factor in the sale of beer 

in the United States is advertising. 

Anheuser-Busch is a substantial 

advertiser, spending approximately 

$378 million last year alone, more than 

the combined spending of its main 

actual competitors in the United States. 

2. The Creation of InBev and Its Position 

Relative to the Market 

InBev sells the number one (#1) or 

number two (#2) beers in over 20 key 

beer markets throughout the world. 

InBev is the number one (#1) seller in 

the following countries: Canada, Brazil, 

Bolivia, Paraguay, Uruguay, Argentina, 

Belgium, Luxembourg, Croatia, Serbia, 

Montenegro, and the Ukraine; and the 

Number Two seller in Cuba, the 

Dominican Republic, Guatemala, 

Ecuador, Peru, Chile, Netherlands, 

Germany, Bulgaria, the Czech Republic, 

Russia and South Korea. 

By way of background, prior to 

forming InBev in the merger of 

Belgium’s Interbrew and Brazil’s AmBev 

in 2004, the world’s largest brewers 

were: (#1) Anheuser-Busch; (#2) 

SABMiller; (#3) Interbrew; (#4) 

Heineken, and (#5) AmBev. After the 

combination of Interbrew and AmBev, 

InBev became the largest brewer in the 

world. 

As the world’s largest brewer, InBev 

has enormous economic capabilities. Its 

2007 market capitalization was in 

excess of $50 Billion, with net profits of 

$7.8 Billion from revenues exceeding 

$21 Billion. These capabilities have also 

been demonstrated by its ability to raise, 

and then pay, the $52 Billion in cash to 

acquire Anheuser-Busch. 

Prior to this attempt to acquire 

Anheuser-Busch, InBev stated 

unequivocally that it intended to 

become a ‘‘player’’ in the production 

Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 10287 

5These figures derive from Anheuser-Busch’s 

annual reports, which are filed with Securities 

Exchange Commission, and therefore subject to 

judicial notice. 

and sale of beer in the United States. 

Only eight months after the merger of 

AmBev and Interbrew, forming InBev, 

Mr. Brito stated his intention to shortly 

‘‘complete our dream of becoming a 

pan-America player.’’ 

InBev also announced to competitors 

and to the public alike that it intended 

to be an entrant into the United States 

market for the production and sale of 

beer. InBev even stated in press releases 

as recent as 2007 that its ‘‘strategy is to 

strengthen its local platforms by 

building significant positions in the 

world’s major beer markets.’’ InBev’s 

strategy began with the InterbrewAmBev merger and in November 2006 

InBev executed a distribution contract 

with Anheuser-Busch for the 

distribution of InBev premium brands 

Stella Artois, Beck’s and Bass in the 

United States. It is this November 2006 

Import Agreement which is described in 

the DOJ’s Complaint in this case. 

InBev has operations around the 

world and internally divides its 

operations into six regions: North 

America, Western Europe, Central and 

Eastern Europe, Asia Pacific, Latin 

America North and Latin America 

South. One if its regions is North 

America, where it sells Labatt Blue, the 

number one Canadian brand in the 

world. 

The North American region includes 

both Canada and the United States. 

InBev has eight breweries in Canada. As 

explained below, immediately prior to 

the acquisition, InBev was not operating 

any breweries in the United States. 

InBev traded in the United States 

through its exclusive distribution 

agreement with Anheuser-Busch. InBev 

has also owned Labatt USA, and the 

Labatt brand is described in detail in the 

Complaint filed in this case. 

3. The Reaction to the Creation of InBev 

Once InBev was created in 2004, 

competition in the United States 

increased dramatically. The industry 

fell into a protracted price war in 2004 

that lasted between a year and 18 

months. During this same period, 

Anheuser-Busch further cut its prices by 

offering greater promotional discounts. 

Its share of volume sold through 

promotional discount increased from 

57% in the first quarter of 2004 to 64% 

by the first quarter of 2006. Compared 

to other years, it spent millions more 

discounting its products the year after 

InBev’s creation: 5

ANHEUSER-BUSCH PROMOTIONAL DISCOUNTING ($ MILLIONS) 

2002 2003 2004 2005 2006 2007 

543.5 511.8 535.7 716.7 675.3 688.6 

% Change ¥6% 4% 25% ¥6% 2% 

Anheuser-Busch also markedly 

increased its advertising expenditures 

the year after InBev was created. While 

advertising expenditures were flat from 

2002 through 2004, they increased by 

$45 Million in 2005, falling again after 

InBev and Anheuser-Busch executed the 

2006 ‘‘Import Agreement.’’ 

ANHEUSER-BUSCH ADVERTISING EXPENDITURES ($ MILLIONS) 

2002 2003 2004 2005 2006 2007 

Anheuser 821.7 806.7 806.7 849.5 771.2 782.7 

% Change ¥2% 0% 5% ¥10% 1% 

Further evidence of InBev’s 

competitive threat, Anheuser-Busch and 

Miller responded by investing to protect 

their market shares: ‘‘InBev is coming 

into a market that is like a hornet’s nest 

that has been disturbed * * * Anheuser 

and Miller aren’t willing to lose a single 

case, and they’re spending money to 

ensure that nobody else gains share.’’ 

In addition, there is already 

substantial evidence in the record from 

the Government that InBev’s presence in 

the market actually increases 

competition. InBev’s Labatt beer 

competes vigorously against both 

Anheuser-Busch and MillerCoors in the 

northeast United States. In those 

markets, and as the Complaint in this 

case generally agrees through its 

analysis of the three areas (Rochester, 

Buffalo and Syracuse), Labatt enjoys a 

21% share of the market, while 

Anheuser-Busch and MillerCoors (the 

MolsonCoors/SABMiller joint venture) 

have 24% and 26%, respectively. As a 

result of this competition, prices have 

been kept at competitive levels. 

In 2006, InBev began discussions with 

Anheuser-Busch that contemplated 

InBev’s agreed withdrawal from 

competing in the United States market. 

In May 2006 InBev sold its only U.S. 

brewery, Rolling Rock, to AnheuserBusch. Eventually, the firms began 

discussing what would become the 

‘‘Import Agreement,’’ a twenty-year 

agreement which authorized AnheuserBusch as the exclusive importer of 

InBev’s brands: Stella Artois, Beck’s, 

Bass Ale, Boddington’s, and others. The 

agreement was signed in November 

2006 and was the subject of press 

releases announcing it. 

After InBev’s sale of Rolling Rock and 

the consummation of the Import 

Agreement, Anheuser-Busch stopped 

competing as vigorously as it had the 

previous year, cutting both its 

advertising expenditures and 

promotional discounts in 2006. 

B. Specific Comments on the Proposed 

Final Judgment 

1. Despite the Huge Size of the 

Acquisition, There Are No 

Determinative Documents 

Missouri Plaintiffs have reviewed the 

Court’s docket and the Federal Register 

and believe that there are not ‘‘any other 

materials and documents which the 

United States considered determinative 

in formulating [a consent decree] 

* * *’’ 15 U.S.C. 16(b); United States v. 

Alex Brown & Sons, Inc. 169 F.R.D. 532, 

541 (S.D.N.Y. 1996), citing United 

States v. General Contracting Co. 531 

F.Supp. 133, 537 F.Supp. 571 (E.D. Va. 

1982) (affirming that Government must 

make available to the public all 

10288 Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 

6http://www.inbev.com/go/media/ 

global_press_releases/ 

press_release.cfm?theID=27&theLang=EN. See also 

73 FR.71683 (noting that Labette brands are 

excluded from the Import Agreement). 

‘‘determinative documents’’ in 

formulating a proposed consent decree). 

In the absence of any such documents 

being made available, Missouri 

Plaintiffs respectfully submit that the 

Court first inquire as to why there are 

no such documents in an acquisition of 

this size. 

2. The DOJ Has Provided No 

Information or Analysis About the 

Highly Publicized and Material 

November 2006 Import Agreement 

Between the Defendants 

One of the determinative documents 

that has not been put in the record is the 

Import Agreement 6 entered into by the 

Defendants in November 2006. 

The DOJ Complaint states that under 

this agreement, Anheuser-Busch became 

the exclusive distributor of InBev 

products in the United States. Missouri 

Plaintiffs contend that before approving 

the PFJ, this Court must determine if the 

Import Agreement is in and of itself, 

anti-competitive as a matter of law. 

Indeed, the Complaint in this case 

clearly seeks to enjoin the acquisition as 

a whole. This Import Agreement 

provides for Anheuser Busch to be the 

exclusive distributor of InBev products 

in the United States. As a whole, the 

remedy proposed by the DOJ cannot be 

independently evaluated absent 

consideration of the terms of that 

agreement, nor can the Court determine 

whether the settlement of the United 

States’ lawsuit on the proposed terms is 

in the public interest. (The Import 

Agreement is described at 73 FR 71683, 

Complaint at ¶ 9. There, the United 

States’ Complaint does not explain any 

aspect of the agreement other than to 

mention the exclusion of the 

distribution of certain InBev brands.) 

The absence of any discussion about the 

single most significant agreement 

between the InBev and Anheuser Busch 

is glaring and should raise a red flag to 

this reviewing Court; this Court also 

cannot properly evaluate the extent of 

the Defendants’ head-to-head 

competition without this Import 

Agreement. 

Here, the DOJ has stated that 

Anheuser-Busch accounts for 

approximately 50% of the beer sales 

nationwide and that beer is sold to 

consumers through a three-tier system 

in New York and the United States; but 

the United States has provided 

information to the Court only on the 

three areas in New York—where the 

United States claims the parties were in 

fact competing head-to-head. The public 

and the Court have not been provided 

with any explanation of the InBev’s 

position as a perceived potential 

competitor, or an actual potential 

competitor, the effect of the Import 

Agreement on those doctrines, whether 

or not the industry viewed InBev as a 

competitive threat in the United States, 

and what impact occurred as a result of 

the November 2006 Import Agreement. 

Missouri Plaintiffs also submit that 

due to the Import Agreement, as even 

the United States impliedly concedes, 

this Court must consider whether or not 

this Import Agreement served to prevent 

entry into the marketplace of the 

world’s largest brewer, and what InBev 

received in return for entering into that 

Import Agreement. 

These inquiries are clearly germane to 

whether or not the PFJ is in the public 

interest. 15 U.S.C. 16(e)(1)(A) & (B). 

3. Potential Entry and the Potential 

Competition Doctrine 

As noted above, InBev has been ready, 

willing and able to enter the United 

States market. Anheuser-Busch 

perceived and understood and believed 

that InBev was ready, willing and able 

to enter the United States market, and 

so represented to the United States 

District Court. 

Section 7’s ‘‘potential competition’’ 

theory has been split by the courts into 

two doctrines, both of which Missouri 

Plaintiffs allege are present here. The 

‘‘actual potential competition’’ doctrine 

proscribes an acquisition of a large firm 

in an oligopolistic market if the 

acquiring firm would be expected to 

enter the market de novo or through a 

‘‘toe-hold’’ acquisition, which would 

likely lead to eventual deconcentration 

of the target market. United States v. 

Siemens Corp., 621 F.2d 499, 504 (2nd 

Cir. 1980) (‘‘Siemens’’). The ‘‘actual 

potential competition’’ doctrine, on the 

other hand, is concerned with the 

acquiring firm’s ability to deconcentrate 

the market in the future. The ‘‘perceived 

potential competition’’ doctrine forbids 

an acquisition where the presence of the 

acquiring firm ‘‘waiting in the wings’’ of 

the market, and perceived by market 

participants as a potential entrant, 

exerts a pro-competitive influence on 

the market. Id. The ‘‘perceived’’ 

potential competition doctrine is 

concerned with the present effect that a 

noncompetitor has on the market. Id. 

InBev’s presence on the periphery of 

the market—as a perceived potential 

and actual entrant as well as a potential 

and actual dominant entrant—has been 

an important consideration in the 

pricing and marketing decisions of 

Anheuser-Busch and other American 

brewers or importers in the United 

States. InBev (party to the Import 

Agreement with Anheuser-Busch) is so 

situated as to be a potential competitor 

and likely to exercise substantial 

influence on the market behavior of 

those brewers in the market. Entry into 

the United States beer market by InBev 

through the acquisition of AnheuserBusch—although its competitive 

conduct may be the mirror image of that 

of Anheuser-Busch—completely 

eliminates the potential major 

competitor exercising present influence 

on the market. 

The facts also show that InBev is an 

aggressive, well-equipped and wellfinanced corporation engaged in the 

same line of commerce as AnheuserBusch and intended to enter the 

oligopolistic market in the United 

States. As the world’s largest brewer, 

InBev has enormous economic 

capabilities. Its 2007 market 

capitalization was in excess of $50 

Billion, with net profits of $7.8 Billion 

from revenues exceeding $21 Billion. By 

reason of its economic capabilities, 

InBev has been more than able to enter 

the United States market de novo and 

build new breweries, create new jobs, 

and establish its own and new 

distributors to market its products, 

which already have a market presence 

in the United States by reason of its 

agreements with Anheuser-Busch to 

divide markets. 

InBev possesses more resources than 

any other brewer in the world. It has the 

technical expertise to enter the market, 

producing over 200 brands of beer in 

123 breweries worldwide. The 

‘‘imported beer’’ segment of the U.S. 

beer market—the segment on which 

InBev has directed its focus—is highly 

attractive, growing at a rapidly 

expanding rate of 8% annually. Even 

InBev admits that it is easy to turn a 

profit in this market, since American 

consumers pay higher premiums for 

imported beers. The costs associated 

with InBev’s entry are relatively very 

small: It does not need to construct 

breweries, develop a distribution 

network, or sink costs into launching 

new brands. In addition, there is a 

substantial likelihood that InBev’s entry 

into the U.S. beer market would lead to 

future deconcentration of that market or 

other procompetitive effects. 

The need to address these potential 

competition issues is consistent with 

the DOJ’s own 1984 Merger Guidelines 

which specifically addresses situations 

where: (1) The acquired firm’s market is 

highly concentrated (HHI above 1800); 

(2) entry barriers in that market are high 

so that firms without specific entry 

advantages cannot be expected to enter; 

Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 10289 

7 InBev’s press release stated in relevant part that 

Anheuser had become the exclusive U.S. importer 

and controlled pricing and distribution of InBev 

import brands in the United States: 

Effective February 1, 2007, Anheuser-Busch will 

import these premium brands and be responsible 

for their sales, promotion and distribution in the 

United States. These InBev brands, which had sales 

volumes of about 1.9 million hectoliters (or about 

1.5 million barrels) in 2005, will be available to 

Anheuser-Busch’s U.S. wholesaler network where 

possible. 

and (3) the acquiring firm’s entry 

advantage is possessed by fewer than 

three firms. See Antitrust Law 

Developments (Fifth) (2002), American 

Bar Association Section of Antitrust 

Law at 356, citing United States v. 

Falstaff Brewing Corp. 410 U.S. 526, 

532–537 (1973). There is no explanation 

before the Court as to how, in this case, 

the DOJ’s analysis confirms to the 

established policies in its own Merger 

Guidelines. 

Indeed, in seeking approval of the 

PFJ, the DOJ expressly stated that it was 

the perceived lack of entry into the 

marketplace by a new competitor that 

justified a conclusion of a lack of 

anticompetitive effect. 73 FR 71690. If it 

turns out that that InBev is a potential 

entrant that is being eliminated thereby 

harming competition and the Import 

Agreement was also designed to keep 

out the well-financed competitor InBev 

from competing with Anheuser brands 

in the United States (as well as fix prices 

and the like) 7—then the DOJ’s and 

Defendants’ rationale for the Complaint 

and PFJ completely collapses. Further, 

the DOJ and the Defendants would be 

judicially estopped from using an 

anticompetitive agreement to defend the 

purported competitive benefit of their 

merger. 

Moreover, Missouri Plaintiffs contend 

that the DOJ’s action fails to adequately 

protect the public interest because the 

Import Agreement (and other evidence) 

will show Anheuser-Busch knew that 

outside of New York areas, InBev fell 

within the potential doctrine and under 

its own internal guidelines was 

obligated to act, thus making the 

Complaint in this case a sham and a 

mockery of judicial power. InBev had, 

and continues to have, the ability to 

compete against Anheuser-Busch by 

importing and distributing beer in the 

United States. InBev’s competition has, 

in fact, constrained prices in the beer 

market in areas outside of the New York 

state which are singled out in the 

Competitive Impact Statement; and the 

facts show that it would be 

economically feasible and profitable for 

the behemoth InBev to enter the market. 

4. The Defendants’ Failure To Advise 

the Two Courts of Proceedings in Each 

Action 

Defendants in this case failed to 

inform the Missouri District Court of the 

true facts of the status of its 

communications with the DOJ, 

subsequently used this Court’s signature 

(late on November 14, 2008) on the Hold 

Separate Stipulation and Order to 

attempt to pre-empt and moot the 

Injunction hearing in the Missouri 

Action, have informed the Missouri 

District Court that the deal is now 

closed, thereby making the Missouri 

Injunction Complaint now ‘‘moot,’’ and 

informed the Missouri District Court 

that the shareholders have been paid in 

an irreversible change to the pre-merger 

status quo. 

The Defendants also failed to tell the 

Missouri District Court that the DOJ 

could still change its mind and 

withdrawal, failed to adequately explain 

to the Missouri District Court that the 

Tunney Act public comment period was 

still open until at least 60 days after 

publication in the Federal Register and 

that with public comments still 

potentially in the offing that the 

Department of Justice had not yet filed 

a response to any public comments. 

Most importantly, the Defendants failed 

to tell the Missouri District Court that 

this Honorable Court had not yet signed 

the Final Judgment. 

In this action, the Government and 

the DOJ also failed to tell this Court, 

when seeking the Court’s signature on 

the afternoon of November 14, 2008, of 

the pendency not just of the litigation 

initiated by the Missouri Plaintiffs, but 

also that there had been extensive 

briefing on a Motion for Preliminary 

Injunction which also sought to enjoin 

the acquisition. After obtaining the 

signature from this Court on the Hold 

Separate Stipulation and Order, the 

Defendants then proceeded to announce 

the closing of the acquisition. 

5. The Recognized Breaches of the 

Department of Justice’s Duty To Protect 

the Public Interest When It Comes to 

Mergers and the Actions of the DOJ and 

Defendants In Not Advising the Court of 

the Clayton Act Claims in the Missouri 

Action 

In considering whether to approve the 

Proposed Final Judgment, one of the 

Court’s role in protecting the public 

interest is to exercise independent 

discretion and is ‘‘* * * [i]nsuring that 

the government has not breached its 

duty to the public in consenting to the 

decree.’’ United States v. Bechtel, 648 

F.2d 660,666 (9th Cir. 1991). Therefore, 

as part if its analysis of this acquisition, 

this Court should take into account the 

virtual ‘‘blank check’’ that the DOJ has 

afforded controversial mergers among 

even direct competitors. 

Here, the acquisition involves that of 

a large firm in an oligopoly. AnheuserBusch is the undisputed leader in the 

United States beer market with almost 

50% market share. There are only two 

additional significant rivals, SABMiller 

and MolsonCoors, as noted above. No 

other competitor has more than 6% 

market share. Furthermore, the number 

2 and 3 rivals have combined their 

United States operations, further 

consolidating the industry. Finally, the 

HHI of the market is an astounding 

3000+, well above the Department of 

Justice’s threshold value of 1800 which 

indicates a ‘‘highly concentrated’’ 

market. 

As we noted above, in April 2008— 

just a few months before this merger 

was announced—the Chairman of the 

Judiciary Committee Task Force on 

Competition Policy and Antitrust Laws, 

Representative John Conyers (D. Mich.) 

made the following comment about the 

present Antitrust Division of the 

Department of Justice when it comes to 

controversial mergers: 

‘‘We have an Antitrust Division that 

approved mergers left and right frequently 

overturning judgments of the career staff of 

the Department of Justice. The Department 

has not attempted to block or modify any 

major merger over the past seven years, 

including some of the largest, controversial 

mergers among direct competitors. * * * The 

Department hands-off approach has even 

encouraged companies with questionable 

merger justifications to give it a try. And 

some analysts have stated that the 

government has nearly stepped out of the 

antitrust enforcement business leaving 

companies to mate with whom they wish.’’ 

Introductory remarks, April 24, 2008, 

hearings on the ‘‘Northwest/Delta 

Airlines merger.’’ Given the 

circumstances of this acquisition, and 

the manner in which the Antitrust 

Division has proceeded, these remarks 

appear not just particularly apt, but very 

disconcerting. In filing this action on 

November 14, 2008, the Government 

was well aware that there was Clayton 

Act litigation pending in the Eastern 

District of Missouri, that the Missouri 

Plaintiffs had requested a Motion for 

Preliminary Injunction and that the 

Defendants had filed an opposition to 

the request for injunctive relief. Rather 

than advise this Court of such material 

facts, the DOJ stood silent while the 

Defendants sought this Court’s signature 

on the Hold Separate Stipulation and 

Order. 

Any meaningful review of this 

transaction requires that this Court 

10290 Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 

consider whether the DOJ conducted a 

sufficient inquiry into the total 

competitive relationship between the 

parties, the effect of the transaction on 

the public as a whole, including the 

limited relief requested in just three 

geographic areas, and any need for 

additional relief, why the DOJ focused 

simply on the one area excluded by the 

Import Agreement between the 

Defendants and if the relief directed in 

these metropolitan areas is in the public 

interest. 

6. The Bi-Partisan Statements by Public 

Officials 

The public interest in this case is 

substantial. This case, before the Court 

during extraordinary economic 

struggles, has an extreme and overriding 

importance to not just the citizens of St. 

Louis, Missouri, but all of America. The 

public has a legitimate public interest in 

free and functioning markets. This 

interest is particularly significant to the 

American public in light of the recent 

nationwide and global history of huge 

multinational corporations engaging in 

unscrupulous and economically 

dangerous conduct that harm many 

citizens of Missouri and the United 

States. This is the largest all cash 

acquisition in the history of the antitrust 

laws. 

The extreme public interest in this 

case is perhaps most evident in the bipartisan statements of its elected 

representatives, charged with the 

responsibility of advancing the interests 

of their constituents. Missouri Governor 

Matt Blunt opposed the combination of 

InBev and Anheuser-Busch and [was] 

‘‘deeply troubled’’ by the proposed 

merger. In a letter to William Kovacic, 

Chairman of the Federal Trade 

Commission, Governor Blunt affirmed 

his concerns that the sale ‘‘would have 

destabilizing impacts on our nation and 

[Missouri]’s long-term economic 

interests.’’ (Motion for Intervention, 

Schwartz Decl., Docket No. 13–3, Exh. 

4, Blunt letter, June 16, 2008.) Governor 

Blunt has also directed Missouri’s 

Department of Economic Development 

to ‘‘explore every option and any 

opportunity we may have at the state 

level to help keep Anheuser-Busch 

where it belongs—in St. Louis.’’ 

Senator Kit Bond (R.-Mo.) stated his 

opposition to the merger and the 

‘‘yielding of control and threatening of 

operations that have been beneficial to 

consumers, workers, American 

communities, and shareholders alike.’’ 

Senator Bond also sought scrutiny to 

protect the interest of Missourians and 

all Americans, stating that ‘‘AnheuserBusch is a major driver in the local, 

state, and national economy up and 

down the supply chain.’’ In a letter to 

Attorney General Mukasey and FTC 

Chairman William Kovacic, Senator 

Bond wrote, ‘‘The proposed foreign 

acquisition of Anheuser-Busch is 

troubling to me because it potentially 

raises antitrust issues under existing law 

by putting significant market share of 

the U.S. in the hands of few 

competitors.’’ (Motion for Intervention, 

Schwartz Decl., Docket No. 13–3, Exh. 

5, Bond letter, June 12, 2008.) 

Missouri Senator McCaskill (D. Mo.) 

expressed similar views, stating in June 

2008 that ‘‘this is not a company that is 

in stress * * * [a]nd has provided good 

middle class jobs.’’ (Motion for 

Intervention, Schwartz Decl., Docket 

No. 13–3, Exh. 6, McCaskill letter, June 

2008.) Senator McCaskill later stated in 

a letter dated November 12, 2008: 

‘‘Moreover, it is a company that has built 

its brand on the tremendous pride from a 

dedicated workforce and firm commitment to 

the community. It is also clear that dramatic 

changes to Anheuser-Busch’s marketing, 

workforce, and culture, will be needed to 

make the deal work, and these will have a 

big negative impact on the community.’’ 

(italics added) (Motion for Intervention, 

Schwartz Decl., Docket No. 13–3, Exh. 

7, McCaskill letter, November 2008.) 

The public interest in the issues at bar 

should not be ignored. 

VII. Conclusion 

For the foregoing reasons, the Court 

should not enter the Proposed Final 

Judgment and after discovery, conduct a 

trial on the issue of whether or not the 

transaction is in the public interest. 

Joseph M. Alioto, Theresa D. Moore, 

Joseph M. Alioto, Jr., Thomas P. 

Pier, Alioto Law Firm, 555 

California Street, Suite 3160, San 

Francisco, California 94104, 

Telephone: (415) 434–8900, 

Facsimile: (415) 434–9200. 

/s/ 

Theodore F. Schwartz, Kenneth R. 

Schwartz, Law Offices of Theodore 

F. Schwartz, 230, South Bemiston, 

Suite 1010, Clayton, MO 63105, 

Telephone: (314) 863–4654, 

Facsimile: (314) 862–4357. 

Gilmur R. Murray, Derek G. Howard, 

Murray & Howard, LLP, 436 14th 

Street, Suite 1413, Oakland, 

California 94612, Telephone: (510) 

444–2660, Facsimile: (510) 444– 

2522. 

Daniel R. Shulman, Gray, Plant & 

Mooty, 500 IDS Center, 80 South 

Eighth Street, Minneapolis, 

Minnesota 55402, Telephone: (612) 

632–3335, Facsimile: (612) 632– 

4335. 

Attorneys for Missouri Plaintiffs 

/s/ 

James Coyne King 

Email: jck@hanify.com 

January 15, 2009 

By Hand 

Joshua H. Soven, Esq., Chief, Litigation I 

Section, Antitrust Division, U.S. 

Department of Justice, 1401 H Street, 

NW., Suite 4000, Washington, D.C. 

20530 

Re: Written Comments on Proposed Final 

Judgment/United States of America v. 

InBev N.V./S.A., et al., U.S.D.C. for D.C., 

Case: 1:08–cv–01965 

Dear Mr. Soven: 

I and this firm represent Esber Beverage 

Company of Canton and Mansfield, Ohio, the 

RL Lipton Co. of Cleveland, Ohio, and the Tri 

County Distributing, Co. of Youngstown, 

Ohio (collectively ‘‘Labatt Distributors’’). The 

Tri It Beverage Company of Buffalo, New 

York and the Onondaga Beverage 

Corporation of Syracuse, New York share 

some of the concerns expressed in this letter. 

We understand that those distributors and 

Tri County Distributing, Inc. of Detroit, 

Michigan will file additional comments. We 

provide this letter on the Proposed Final 

Judgment in the above-referenced action 

which requires InBev to divest all assets 

associated with the Labatt Brand (‘‘Labatt 

Brand’’) consistent with the Antitrust 

Procedures and Penalties Act, 15 U.S.C. 

§§ 16(b)–(c). 

These comments outline the views of our 

clients relating to the Complaint, the 

Competitive Impact Statement and the 

Proposed Final Judgment in the abovereferenced action relating to the acquisition 

by InBev N.V./S.A. (‘‘InBev’’) of the 

Anheuser-Busch Companies, Inc. 

(‘‘Anheuser-Busch’’). Our clients are 

available to you and are prepared to 

supplement and expand upon the comments 

set forth herein. 

PURPOSE 

At the outset, let me be clear that the Labatt 

Distributors concur with the Division’s goal 

in the Proposed Final Judgment of preserving 

the Labatt Brand as a viable brand and as a 

competitor of the products of AnheuserBusch and other competitive products in the 

relevant markets. The primary purpose of 

these comments is to ensure that the goals of 

the Proposed Final Judgment are achieved at 

all market levels to maximize the positive 

competitive impact of the divestiture. 

The comments bear on two principal areas 

of concern. The initial concern goes to the 

identity of the eventual Acquirer (as defined 

in the Proposed Final Judgment as the entity 

or entities to whom Defendants divest the 

Divested Assets) and the actual terms of the 

divestiture. The second concern relates to 

preserve and enhance the maintenance of 

Labatt’s existing distribution network as a 

means to more competitive markets. 

First, the Acquirer must be well-positioned 

to support and market the Labatt Brand so 

that the position of the Labatt Brand is 

maintained and enhanced. The Labatt Brand 

Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 10291 

is a niche product, with a specific set of 

characteristics that make the Brand 

appealing. The Labatt Brand derives much of 

its cachet from its status as a Canadian 

import, and is most popular in those U.S. 

states closest to the Canadian border. The 

Labatt Brand products also have a price point 

more akin to domestic premium beer brands, 

such as Budweiser, Miller and Coors than 

most imported beers. That market 

positioning, as a Canadian import for the 

price of a domestic, has been the lynchpin 

the Labatt Brand’s success. Any significant 

change in this price point will adversely 

affect competition in the relevant geographic 

markets. It is no accident that the Division’s 

investigation concluded that InBev’s 

acquisition of Anheuser-Busch could lead to 

unlawful market concentration in Buffalo, 

Rochester and Syracuse, which are just down 

the road (or across a lake) from Canada. 

Second, another condition essential to the 

Division’s goal of maintaining the Labatt 

Brand as a competitive brand is for the 

Acquirer to maintain the existing distribution 

network for a commercially reasonable 

period of time, especially where the 

alternative network would concentrate the 

distribution of the Labatt Brand and the 

Anheuser-Busch products. Such a 

requirement is clearly consistent with the 

intent of the Proposed Final Judgment and 

relates solely to the distribution system for 

the Labatt Brand products. The language of 

the Proposed Final Judgment leaves open the 

possibility that competition at the distributor 

level will be suppressed because the 

Acquirer may terminate existing distributors 

and consolidate the Labatt Brand with other 

brands at the distributor level. The most 

likely result of brand consolidation is 

unwanted market concentration and likely 

price increases. Consequently, the Final 

Judgment should require any Acquirer to 

maintain the existing distribution network 

for the Labatt Brand for a commercially 

reasonable time period. 

Background 

As proposed, InBev’s acquisition of 

Anheuser-Busch would eliminate substantial, 

direct competition between InBev and 

Anheuser-Busch in Buffalo, Rochester and 

Syracuse, New York, as well as in other 

regions where the Labatt Brand is a 

significant player. For the reasons set forth in 

the Competitive Impact Statement, the 

proposed Final Judgment requires InBev USA 

LLC (‘‘IUSA’’) to divest the Labatt Brand, 

along with a license to brew, market, promote 

and sell Labatt Brand products for 

consumption in the United States as a 

condition for InBev proceeding with its $52 

billion acquisition of Anheuser-Busch. The 

essential reason for requiring the divestiture 

is that the transaction, absent divestiture, 

would likely lead to higher prices for beer in 

the Buffalo, Rochester and Syracuse, New 

York metropolitan areas and possibly in 

other areas where the Labatt Brand has 

significant market share because the Labatt 

Brand’s and Anheuser-Busch’s offerings 

collectively constitute a substantial 

percentage of those markets. 

As alleged in the Complaint, the Buffalo, 

Rochester and Syracuse beer markets are 

highly concentrated. The top three brewers— 

Anheuser-Busch, Miller-Coors and IUSA, 

respectively possess approximately 24%, 

26% and 21% of the Buffalo and Rochester 

beer markets. In the Syracuse geographic 

market, the same three brewers respectively 

possess approximately 28%, 28% and 13% of 

the beer market. According to the Complaint, 

the supply responses from competitors or 

potential competitors would not likely 

prevent the 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 combined 

entities 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 proceed. 

The remedy set forth in the Proposed Final 

Judgment for this anticompetitive aspect of 

the InBev acquisition of Anheuser-Busch is 

to require InBev to divest the Labatt Brand 

and grant a perpetual license to the Acquirer 

to sell Labatt Brand products for 

consumption throughout the United States, 

as well as to assign additional rights and 

contracts necessary to maintain the viability 

of the Labatt Brand. These rights include an 

exclusive, perpetual, assignable, transferable, 

and fully-paid-up license that grants the 

Acquirer the rights to (a) brew Labatt Brand 

products in Canada and/or the United States, 

(b) promote, market, distribute and sell 

Labatt Brand products for consumption in 

the United States, and (c) use all the 

intellectual property rights associated with 

the marketing, sale, and distribution of Labatt 

Brand products for consumption in the 

United States. 

The Proposed Final Judgment ensures the 

uninterrupted sale of Labatt Brand products 

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 Service Agreement 

of up to one year in length, and to enter into 

a supply contract for Labatt Brand products 

sufficient to meet all or part of the Acquirer’s 

needs for a period of up to three years.’’ 

Competitive Impact Statement at 8 [emphasis 

added]. 

Comments and Rationale 

As the Proposed Final Judgment and 

Competitive Impact Statement make clear, 

the goal of the Labatt Brand divestiture will 

only be realized if the Acquirer of the Labatt 

Brand assets maintains the brand as a viable 

competitor for Anheuser-Busch products in 

the relevant markets. If the Labatt Brand does 

not remain a viable competitor, the beer 

markets could fall victim to the concentration 

and anticompetitive price increases the 

Division is seeking to avoid through the 

divestiture ordered by the Proposed Final 

Judgment. Similarly, while not the focus of 

the Complaint or the remedy provided in the 

Proposed Final Judgment, the Labatt Brand 

has a significant market share in Ohio, 

Michigan, Indiana and Wisconsin, and the 

weakening of the Labatt Brand overall, 

including in those states, would have a 

similarly negative impact on competition in 

those regional beer markets. 

Divestiture Only Remedies Antitrust 

Violations If the Divested Business Remains 

Viable Thereafter 

In considering remedies for antitrust 

violations, the Courts, the Division and the 

FTC have uniformly recognized that the 

viability of a divested business line as a 

competitor is crucial to the usefulness of 

divestiture as a cure for an antitrust violation. 

See, e.g., Utah Public Service Comm’n v. El 

Paso Natural Gas Co., 395 U.S. 464, 470 

(1969) (‘‘The purpose of our mandate was to 

restore competition in the California market 

* * * [t]he object of the allocation of gas 

reserves must be to place New Company in 

the same relative competitive position vis-a`- 

vis El Paso in the California market as that 

which Pacific Northwest enjoyed 

immediately prior to the illegal merger.’’). 

Indeed, post-transaction viability is the sine 

qua non of a curative divestiture. See, e.g., 

White Consol. Indus. v. Whirlpool Corp., 612 

F.Supp. 1009, 1028 (N.D. Ohio 1985) vacated 

after compliance by 619 F.Supp. 1022 

(holding that company acquiring divested 

assets must (1) have capacity to compete 

effectively and (2) be free to operate divested 

business absent control by seller). The 

Courts, the Division, and the FTC have 

fashioned hold separate orders, like the 

Stipulation in the above-referenced action, to 

maintain the viability of the business which 

is the subject of a divestiture as a competitor 

in the relevant markets. 

To Maintain the Labatt Brand as a Viable 

Brand, the Eventual Acquirer Will Need to 

Adopt Specific Strategies 

The Labatt Distributors are concerned that 

certain potential Acquirers of the Labatt 

Brand are not good fits, and could diminish 

the Labatt Brand as a competitor for 

Anheuser-Busch in the relevant markets. 

While the Order correctly leaves to the 

Acquirer to decide the brand promotion and 

strategy to pursue, the Labatt Distributors 

wish to alert the Division and the Court to 

certain characteristics of the Labatt Brand 

that any Acquirer should attend to if the goal 

is to maintain the Labatt Brand as a viable 

competitor in the relevant markets. InBev, of 

course, has no incentive to sell the divested 

assets to the strongest competitor. To the 

contrary, after the divestiture, its financial 

interest will be to increase the sales of 

Anheuser-Busch products at the expense of 

the Labatt Brand. In this regard, the Labatt 

Distributors’ list their strategic concerns. 

The Acquirer of the Divested Assets Must 

Maintain the Labatt Brand as a Canadian 

Import 

Under the Proposed Final Judgment, the 

Acquirer can purchase the Labatt Brand 

brewed by InBev in Canada for three years. 

After that time, the Acquirer must find a new 

brewery. As set forth in the Proposed Final 

Judgment, the Acquirer could even elect to 

brew the Labatt Brand on its own, in the 

United States, from the outset. Such a 

decision would be antithetical to maintaining 

the Labatt Brand as a competitive brand. 

Much of the Labatt Brand’s panache comes 

from its status as an import. With the sales 

volume and other relevant factors specific to 

the Labatt Brand products, the Acquirer’s 

10292 Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 

options are limited. The Labatt Distributors 

are not aware of breweries with substantial 

capacity in Canada other than the breweries 

of InBev and Molson/Coors. Neither InBev 

nor Molson/Coors will have an incentive to 

assist the Acquirer in maintaining the Labatt 

Brand. The other breweries of which the 

Labatt Distributors are aware are too small to 

replace the approximately 20 million cases of 

the Labatt Brand products sold in the United 

States each year. The Labatt Distributors 

request that the Proposed Final Judgment be 

modified to give the Acquirer the option to 

extend its right to purchase the Labatt Brand 

brewed by InBev (which, after all, will 

presumably still be brewing it for sale in 

Canada and elsewhere) in Canada beyond the 

three-year period, or otherwise ensure that 

the Acquirer maintains the Labatt Brand as 

a Canadian import. 

The Acquirer Must Maintain Competitive 

Pricing 

The Labatt Distributors are concerned that 

an Acquirer, potentially saddled with debt 

from the cost of the acquisition, will raise 

prices in an effort to generate additional cash. 

Beer sales are elastic and greatly impacted by 

pricing. Such a move would be devastating 

to the Labatt Brand. The Labatt Brand is 

successful as an import at its current 

competitive price point. At higher prices 

(such as those charged by other imported 

beers), the Labatt Brand will be less 

competitive and sales will go down as Labatt 

Brand’s consumers often choose the Labatt 

Brand over domestic beers like Budweiser 

and Coors but would likely opt for a cheaper 

domestic beer over a more-expensive Labatt 

Brand product. 

The Acquirer Must Maintain an Attractive 

Portfolio/Brand Mix 

The Labatt Distributors are concerned that 

the Acquirer will reduce the numbers of skus 

in the portfolio, thus weakening the Labatt 

Brand equity. The Acquirer must continue to 

offer the standard items including six, 

twelve, eighteen, twenty-four and thirty pack 

bottles and cans as well as the Seasonal 

Packages such as the Heritage packs, Sport 

packs as well as various brand extensions 

such as Light, Ale, Porter, Kokanee, Ice, etc. 

Beer sales in the United States are dependent 

on consumer factors, including packaging 

and convenience. In this way, beer sales are 

similar to most food products. Beer, in 

particular, is an extreme example of this 

phenomenon because of widespread 

situational use and the wide demographic 

range of consumers. Reduction in brand 

extensions for packages would further 

diminish the competitive level of Labatt 

Brand, decreasing competition in the relevant 

market. 

The Acquirer Must Provide Sufficient 

Marketing and Promotional Resources to 

Maintain and Develop the Labatt Brand 

As the Division recognizes, only an 

Acquirer who intends to continue investing 

in the Labatt Brand will succeed in fulfilling 

the pro-competitive goals of the Proposed 

Final Judgment. The Labatt Distributors urge 

the Division to consider both the product mix 

of the Acquirer as well as its sales and 

marketing plans to ensure that the Acquirer 

has both the incentive to invest in the Labatt 

Brand and to provide sufficient resources for 

marketing the Labatt Brand going forward. 

Beer is not a commodity, but rather an 

ingested product that connotes a particular 

image and level of reward. Without proper 

advertising and image support, the Labatt 

Brand will suffer and decrease its 

competitive heft. 

The Likely Acquirer of the Labatt Brand 

Could Promote Further Concentration at the 

Distributor Level 

The Labatt Distributors believe that 

maintaining the present distributor network 

is crucial to maintaining the Labatt Brand as 

a viable competitor in the relevant markets. 

The Labatt Distributors wholeheartedly 

concur with the Division’s assessment of 

impact on competition caused by the InBev 

acquisition of Anheuser Busch. In fashioning 

its remedy for the anticompetitive impact, 

the Proposed Final Judgment included 

among the Divested Assets, ‘‘all contracts and 

agreements of IUSA * * * including, 

without limitation, wholesaler and 

distributor agreements into which InBev or 

IUSA have entered for the sale or distribution 

of the Labatt Brand within the United States 

* * *;’’ Proposed Final Judgment, 

§ II (F)(iii)(B). 

The Division’s clear intention is to 

preserve the existing distribution network for 

the Labatt Brand. As the Division has 

recognized, distributors play an important 

role in the market for beer. See Competitive 

Impact Statement (‘‘CIS’’) at 4–6. Keeping the 

present network of Labatt Distributors in 

place for a commercially reasonable time 

period—the existing Distributors collectively 

have invested substantial sums in building 

the brand strength of the Labatt Brand—is 

essential to maintaining the Labatt Brand as 

a viable competitor. Because of a quirk in the 

regulation of distributors in some states, 

however, the Proposed Final Judgment may 

have an unintended consequence of 

promoting further consolidation at the 

distributor level and weakening Labatt 

Brand’s distribution network. 

An immediate change in the distribution 

network will result in the loss of a significant 

number of jobs and the elimination of certain 

businesses. Certainly, the Division does not 

want its actions to directly result in the loss 

of jobs and the consequent increase in market 

concentration. In addition, the Labatt 

Distributors have a very real and monetary 

interest in the success of the Acquirer and 

the Labatt Brand. For example, the Labatt 

Distributors in Ohio have invested hundreds 

of thousands of dollars in the success of the 

Labatt Brand. 

On the contrary, the requirement set forth 

in the Proposed Final Judgment that the 

Divested Assets included all rights pursuant 

to distributor contracts may not prevent the 

Acquirer from terminating the Labatt 

Distributors. This issue is especially 

pronounced for distributors in Ohio and is 

likely to impact Labatt Distributors in other 

states as well. Certain state laws which 

protect distributors permit termination upon 

the sale of assets. Because of these laws, and 

the restrictions placed on the power of 

suppliers/manufacturers to terminate 

distributors, brand acquirers often terminate 

distribution contracts as a matter of course 

after an acquisition. Under normal 

circumstances, where the sale is part of the 

ordinary operation of the marketplace, such 

reflexive terminations do not raise 

competitive concerns. Here, however, where 

the sale is a remedy for an antitrust violation, 

such a termination would have the effect of 

lessening competition between the Labatt 

Brand and the remaining Anheuser-Busch 

brands. The replacement of some or all of the 

present Labatt Brand distribution network 

with a new set of distributors, possibly tied 

to the Acquirer but without longstanding 

commitment to, and appreciation of, the 

Labatt Brand creates a risk of weakening 

Labatt Brand as a brand to the detriment of 

competition in the relevant markets. The 

simple solution is to require the Acquirer to 

keep the Labatt Distributors for a 

commercially reasonable period of time. 

The Acquirer Needs To Maintain the 

Existing Distribution Network for the Labatt 

Brands To Enhance the Competitive Results 

of Divestiture 

The likely Acquirers of the Labatt Brand 

are Diageo-Guinness, USA (‘‘Guinness’’), 

High Falls-Genesee of New York, Heineken 

USA or certain investment groups not 

presently active in the beer market in the 

relevant geographic area. Many of the most 

likely Acquirers each sell brands competitive 

to the Labatt Brand in the relevant markets. 

While not exhaustive, the following 

discussion highlights the concern that the 

Labatt Distributors have around postdivestiture consolidation. The Labatt 

Distributors can expand on this information 

and likely scenarios. 

One potential Acquirer is Guinness. If, as 

a result of the acquisition, Guinness decides 

to discontinue the distribution arrangements 

with the current distributors of the Labatt 

Brand beer in Canton, Cleveland, 

Youngstown and Mansfield, Ohio, Guinness 

likely will consolidate the actual distribution 

of the Labatt Brand beer with distributors 

who presently also distribute other brands 

currently sold by Guinness. This result will 

shift the share of the imported beer market 

among the distributors for the Labatt Brand 

products and its competitive brands from 

20% to 40% and, in a certain market, one 

distributor will have 60% to 90% of the 

market. For example, in the Ohio markets of 

Canton, Cleveland, Youngstown and 

Mansfield, the purchase of the Labatt Brand 

by Guinness and a change of the distribution 

of the Labatt Brand products from current 

distributors to the existing distributors of 

Guinness products would likely increase the 

market share for imported beers in those 

respective markets by 32%, 30%, 23% and 

26%, respectively. Again, this consolidation 

of market share would give the current 

distributors of the Acquirer market power 

sufficient to increase price for the Labatt 

Brand products to consumers independent of 

the fact that Guinness owned the brand 

instead of the combining companies. 

Other potential Acquirers are independent 

investor groups with little or no experience 

in the relevant markets. If this Acquirer 

terminates the Labatt Distributors and 

Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 10293 

attempts to distribute the Labatt Brand 

through distributors which also sell products 

competitive to the Labatt Brand products, the 

results will likely be, similar to the example 

with Guinness as the Acquirer, a lessening of 

competition and an increase in prices. Such 

results are likely compounded by the specific 

strategy needs of the independent investor 

group/Acquirer. 

CONCLUSION 

For the foregoing reasons, the comments of 

the Labatt Distributors are limited and only 

bear on issues ‘‘around the edges’’ of the 

Proposed Final Judgment. Indeed, the Labatt 

Distributors believe that their comments are 

consistent with the Division’s intent as 

expressed in the Proposed Final Judgment. In 

short, the Acquirer of the Divested Assets 

must maintain the Labatt Brand as a 

Canadian import and must adopt and 

continue specific strategies for the Division 

to achieve its goal. One material risk 

presented by the current language of the 

Proposed Final Judgment is that the Acquirer 

will terminate some or all of the existing 

distributors of the Labatt Brand products. 

This is likely to lead to increased 

consolidation at the distributor level and 

weaken the Labatt Brand as a viable 

competitor. Such a result will increase 

concentration in the relevant market and 

likely result in higher and less-competitive 

pricing. The simple solution is to require the 

Acquirer to maintain the existing distribution 

network for the Labatt Brand products for a 

commercially reasonable period of time. 

Implementation of changes consistent with 

these comments will increase the likely 

success of the divestiture. 

Thank you. 

Sincerely, 

James Coyne King. 

JCK/kjb—518505 

January 22, 2009 

By Hand 

Joshua H. Soven, Esq., 

Chief, Antitrust Division, Litigation I Section, 

U.S. Department of Justice, 1401 H 

Street, NW., Suite 4000, Washington, 

D.C. 20530. 

Re: Written Comments on Proposed Final 

Judgment/United States of America v. 

InBev N.V./S.A., et al. , U.S.D.C. for D.C., 

Case: 1:08–cv–01965/ 

Dear Mr. Soven: 

I represent Onondaga Beverage Corporation 

(‘‘Onondaga’’), a wholesale beer distributor 

based in Syracuse, New York, which 

distributes the Labatt brands of beer (the 

‘‘Labatt Brand’’) in its upstate New York 

territory. As indicated in the January 15, 

2009 letter from James C. King on behalf of 

certain Labatt Distributors, Onondaga shares 

some of the concerns expressed in Mr. King’s 

letter. In addition, I represent Rochester Beer 

& Beverage Corp. of Rochester, New York, 

McCraith Beverages, Inc. of Utica, New York, 

and Owasco Beverage, Inc. of Auburn, New 

York, who join in this letter as well. I am 

further authorized to state that Seneca 

Beverage Corp. of Elmira, New York and 

Rocco J. Testani, Inc. of Binghamton, New 

York also join in these comments. All of 

these firms distribute the Labatt Brand in 

their respective territories. 

We provide this letter to discuss, in greater 

detail, our concerns on the Proposed Final 

Judgment in the above-referenced action, 

which requires InBev to divest all assets 

associated with the Labatt Brand (‘‘Labatt 

Brand’’) consistent with the Antitrust 

Procedures and Penalties Act, 15 U.S.C. 

§§ 16(b)–(c). 

These comments outline the views of our 

clients relating to the Complaint, the 

Competitive Impact Statement and the 

Proposed Final Judgment in the abovereferenced action relating to the acquisition 

by InBev N.V./S.A. (‘‘InBev’’) of the 

Anheuser-Busch Companies, Inc. 

(‘‘Anheuser-Busch’’). Our clients are 

available to meet with you and are prepared 

to supplement and expand upon the 

comments set forth in this letter if that would 

be helpful to the Division. 

Purpose 

Let me emphasize first that our clients, as 

Labatt distributors, share the Division’s goal, 

as set forth in the Proposed Final Judgment, 

of preserving the Labatt Brand as a viable 

brand and as a competitor of the products of 

Anheuser-Busch and other brewers in the 

relevant markets. The primary purpose of 

these comments is to ensure that the goals of 

the Proposed Final Judgment are achieved, so 

as to maximize the positive competitive 

impact of the divestiture. Our comments 

focus on one principal area of concern, 

which we view as critical to the Labatt Brand 

continuing as a viable competitive force in 

the upstate New York market area: the need 

to maintain the Labatt Brand as a Canadian 

imported beer. 

The Labatt Brand is a unique product, with 

a specific set of characteristics that have 

made the brand appealing and enabled it to 

compete effectively with other beers in the 

upstate New York market area, particularly 

those areas near the Canadian border. The 

Labatt Brand derives brand equity and 

successful market position from its status as 

a high-quality Canadian import, as its greater 

popularity along the Canadian border 

demonstrates. Indeed, as we show below, the 

Labatt Brand has consistently advertised so 

as to emphasize its Canadian origin. 

The Labatt Brand also is sold at prices 

closer to that of domestic premium beer 

brands, such as Budweiser, Miller and Coors, 

than most imported beers, which are 

generally higher-priced. That market 

positioning, as a Canadian import for the 

price of a domestic, has been the linchpin to 

the Labatt Brand’s success. Any significant 

change in this brand identity will harm the 

Labatt Brand as a competitor and adversely 

affect competition in the relevant geographic 

markets. 

Background 

As proposed, InBev’s acquisition of 

Anheuser-Busch would eliminate substantial, 

direct competition between InBev and 

Anheuser-Busch in Buffalo, Rochester and 

Syracuse, New York, as well as in other 

regions where the Labatt Brand is a 

significant competitive force. For the reasons 

set forth in the Competitive Impact 

Statement, the proposed Final Judgment 

requires InBev USA LLC (‘‘IUSA’’) to divest 

the Labatt Brand, and grant the Acquirer a 

license to brew, market, promote and sell 

Labatt Brand products for consumption in 

the United States as a condition for InBev 

proceeding with its $52 billion acquisition of 

Anheuser-Busch. The essential reason for 

requiring the divestiture is that the 

transaction, absent divestiture, would likely 

lead to higher prices for beer in the Buffalo, 

Rochester and Syracuse, New York 

metropolitan areas and possibly in other 

areas where the Labatt Brand has significant 

market share, because the Labatt Brand’s and 

Anheuser-Busch’s offerings collectively 

constitute a substantial percentage of those 

markets. 

As alleged in the Complaint, the Buffalo, 

Rochester and Syracuse beer markets are 

highly concentrated. We estimate market 

shares in the Syracuse, Rochester and Buffalo 

markets as follows: 

Anheuser-Busch 

(percent) 

MillerCoors 

(percent) 

Labatt USA 

(percent) 

Syracuse .................................................................................................................... 28.0 32.0 21.0 

Rochester ................................................................................................................... 29.0 24.0 24.0 

Buffalo ........................................................................................................................ 30.0 23.0 27.0 

According to the Complaint, the supply 

responses from competitors or potential 

competitors would not likely prevent the 

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 combined 

entities in those markets from being 

profitable. Both the Competitive Impact 

Statement and the Complaint noted that 

‘‘[e]ntry 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 proceed.’’ Statement at 6; Complaint at 

para. 25. Furthermore, even if a new 

competitor did enter the marketplace, the 

Complaint emphasized that such a ‘‘new 

entry is not likely to prevent the likely 

anticompetitive effects of the proposed 

acquisition.’’ (Complaint at para. 25). 

The remedy set forth in the Proposed Final 

Judgment for this anticompetitive aspect of 

10294 Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 

1See also Mazzoni Letter at 1. 

2Currently, there are potential Purchasers with 

unused U.S. brewing capacity. One example of such 

a potential purchaser is High Falls/Genessee. See 

Mazzoni Letter at 3. 

3See Mazzoni Letter at 2. 

4See market share data at page 2 above and 

Mazzoni Letter at 1. 

the InBev acquisition of Anheuser-Busch is 

to require InBev to divest the Labatt Brand 

and grant a perpetual license to the Acquirer 

to sell Labatt Brand products for 

consumption throughout the United States, 

as well as to assign additional rights and 

contracts necessary to maintain the viability 

of the Labatt Brand. These rights include an 

exclusive, perpetual, assignable, transferable, 

and fully-paid-up license that grants the 

Acquirer the rights to (a) brew Labatt Brand 

products in Canada and/or the United States, 

(b) promote, market, distribute and sell 

Labatt Brand products for consumption in 

the United States, and (c) use all the 

intellectual property rights associated with 

the marketing, sale, and distribution of Labatt 

Brand products for consumption in the 

United States. 

The Proposed Final Judgment ensures the 

uninterrupted sale of Labatt Brand products 

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 Service Agreement 

of up to one year in length, and to enter into 

a supply contract for Labatt Brand products 

sufficient to meet all or part of the Acquirer’s 

needs for a period of up to three years.’’ 

Competitive Impact Statement at 8 [Emphasis 

added]. As we discuss below, however, the 

three-year time limit on the supply 

agreement, the resulting shift in the brewer 

of the Labatt Brand after three years if not 

sooner, and the possibility that the Labatt 

Brand might be brewed in the United States 

contain the seeds of destruction of the Labatt 

Brand as a viable competitor in the upstate 

New York markets that were the Division’s 

principal concern. 

Comments and Rationale 

As the Proposed Final Judgment and 

Competitive Impact Statement make clear, 

the goal of the Labatt Brand divestiture will 

only be realized if the Acquirer of the Labatt 

Brand assets maintains the brand as a viable 

competitor for Anheuser-Busch products in 

the relevant markets. If the Labatt Brand does 

not remain a viable competitor, the relevant 

upstate New York beer markets will fall 

victim to the concentration and 

anticompetitive price increases the Division 

is seeking to avoid through the divestiture 

ordered by the Proposed Final Judgment. 

Under the Proposed Final Judgment, the 

Acquirer can purchase the Labatt Brand 

brewed by InBev in Canada for three years. 

After that time, the Acquirer must find a new 

brewery. As set forth in the Proposed Final 

Judgment, the Acquirer could change brewers 

or even elect to brew the Labatt Brand in the 

United States, from the outset. As set forth 

below, such a decision would make it 

impossible to maintain the Labatt Brand as a 

competitive brand. 

We attach to this letter a letter from 

Michael J. Mazzoni, an expert consultant in 

the beer industry with in-depth experience in 

the sales, marketing and distribution of 

imported and domestic beers at both the 

brewer-importer and the wholesale 

distributor tiers of the industry (the 

‘‘Mazzoni Letter’’). Mr. Mazzoni describes the 

disastrous effect on the Labatt Brand from the 

loss of authenticity that will result if the 

brewing of the brand shifts to another brewer, 

and especially if the Canadian identity that 

is the core of its brand equity is lost by 

shifting production to the United States. 

Divestiture Only Remedies Antitrust 

Violations If the Divested Business Remains 

Viable Thereafter 

In considering remedies for antitrust 

violations, the Courts, the Division and the 

FTC have uniformly recognized that the 

viability of a divested business line as a 

competitor is crucial to the usefulness of 

divestiture as a cure for an antitrust violation. 

See, e.g., Utah Public Service Comm’n v. El 

Paso Natural Gas Co., 395 U.S. 464, 470 

(1969) (‘‘The purpose of our mandate was to 

restore competition in the California market. 

* * * [t]he object of the allocation of gas 

reserves must be to place New Company in 

the same relative competitive position vis-a`- 

vis El Paso in the California market as that 

which Pacific Northwest enjoyed 

immediately prior to the illegal merger.’’). 

Indeed, post-transaction viability is the sine 

qua non of a curative divestiture. See, e.g., 

White Consol. Indus. v. Whirlpool Corp., 612 

F.Supp. 1009, 1028 (N.D. Ohio 1985) vacated 

after compliance by 619 F.Supp. 1022 

(holding that company acquiring divested 

assets must (1) have capacity to compete 

effectively and (2) be free to operate divested 

business absent control by seller). The 

Courts, the Division, and the FTC have 

fashioned hold separate orders, like the 

Stipulation in the above-referenced action, to 

maintain the viability of the business which 

is the subject of a divestiture as a competitor 

in the relevant markets. 

The Acquirer of the Divested Assets Must 

Maintain the Labatt Brand as a Canadian 

Import 

Our clients are concerned that certain 

potential Acquirers of the Labatt Brand are 

not good fits, and could diminish the Labatt 

Brand as a competitor for Anheuser-Busch 

and MillerCoors in the relevant markets for 

reasons that may suit the potential Acquirers’ 

economic interests but will not preserve the 

competitive viability of the Labatt Brand in 

the long term. While the Order correctly 

leaves to the Acquirer to decide the brand 

promotion and strategy to pursue, we wish to 

make certain that the Division and the Court 

understand that the Labatt Brand garners its 

brand equity, and, in turn, much of its market 

strength, from the fact that it is a high-quality 

Canadian import sold at the price of domestic 

premium beers.1 This Canadian import status 

is the defining characteristic of the Labatt 

Brand (see advertising examples below) that 

any Acquirer must preserve if the goal is to 

maintain the Labatt Brand as a viable 

competitor in the relevant markets. 

We request that the Proposed Final 

Judgment be modified to give the Acquirer 

the right to extend its right to purchase the 

Labatt Brand brewed by InBev (which, after 

all, will still be brewing it for sale in Canada 

and elsewhere) in Canada beyond the threeyear period, and in any case to ensure that 

the Acquirer brews the Labatt Brand in 

Canada and so maintains the Labatt Brand as 

a Canadian import. 

Short-Term Economic Incentives of 

Purchasers May Be at Odds with the LongTerm Competitive Viability of the Labatt 

Brand 

Certain potential acquirers 2 with excess 

U.S. brewing capacity have economic 

incentives to shift the brewing of the Labatt 

Brand to their United States facilities that are 

unrelated to maintaining the Labatt Brand as 

an effective competitor. Because unused 

brewing capacity is extremely costly to any 

U.S. brewer, and filling unused brewing 

capacity is economically efficient in the short 

term, such a brewer can reduce the costs of 

its existing domestic products by brewing the 

Labatt Brand in its unused U.S. brewery 

capacity. This will help the brewer to get 

through difficult economic times, and to 

improve the competitiveness of its domestic 

brands, but these smaller brands cannot 

replace the Labatt Brand as a major 

competitive force in the key upstate New 

York markets. The disastrous long-term 

consequences of such a move for the Labatt 

Brand may be outweighed for the brewer by 

the benefits for its other products, but the 

resulting loss of the Labatt Brand as a viable 

competitor will have precisely the 

anticompetitive effects divestiture was 

intended to prevent. While such a step might 

benefit the Acquirer, it would not fulfill the 

Division’s purpose of preserving the Labatt 

Brand as a viable competitor in the markets 

in which it is a strong competitor today. 

The Labatt Brand’s market position is 

based on its identification as a high-quality 

Canadian import brand, and its brand equity 

has been developed over many years by 

advertising emphasizing its Canadian origin. 

Losing that brand equity would destroy the 

identity of the Labatt Brand, insulting brand 

loyalists 3 and rendering it a domestic brand 

with no distinguishing characteristics. 

Additionally, it is likely that MillerCoors 

Brewing Company would use advertising to 

inform U.S. Consumers that its own Molson 

brands were the only authentic Canadian 

beers brewed in Canada and sold in the U.S. 

Labatt could not remain a viable competitor 

were this to occur. If the Labatt Brand fails, 

the market share data and economics of 

distribution indicate that its distributors will 

likely fail as well in the key upstate New 

York markets.4

Lo ̈wenbra ̈u Failed as a Competitive Import 

When Miller Acquired It and Shifted 

Production to the U.S. 

The decline of the Lo ̈wenbra ̈u Brand is an 

example of a Purchaser with unused U.S. 

brewing capacity acting on its economic 

incentive at the expense of the long-term 

viability of the brand. In the 1970s, the image 

and authenticity of Lo ̈wenbra ̈u beer, then one 

of the nation’s leading imported beers, was 

severely damaged after it was bought by the 

Miller Brewing Company, which moved 

production from Munich to its American 

Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 10295 

5Available at: http://www.nytimes.com/2005/10/

05/business/media/05adco.html?_r=1&

scp=1&sq=altoids%20bosman&st=cse. 

6Copies of these commercials are included in the 

DVD–ROM marked as ‘‘Exhibit O,’’ and are also 

available on the Internet at Youtube.com. See 

Exhibit O, Folder 1. Also available at: http:// 

www.youtube.com/watch?v=rmb8NK3oZZQ. 

7See Exhibit O, Folder 2. Also available at: 

http://www.youtube.com/ 

watch?v=xK01QWA27H8&NR=1. 

8See Exhibit O, Folder 3. Also available at: 

http://www.youtube.com/ 

watch?v=cKQ3Fnkdplg&feature=related. 

9See Exhibit O, Folder 4. Also available at: 

http://www.youtube.com/ 

watch?v=llgGjoTL7TI&feature=related. 

10See Exhibit O, Folder 5. Also available at: 

http://www.youtube.com/ 

watch?v=HntrObODHqQ&feature=related. 

11See Exhibit O, Folder 6. Also available at: 

http://www.youtube.com/watch?v=IQ9IsiZqkGg. 

12See Exhibit O, Folder 7. Also available at: 

http://www.youtube.com/watch?v=fPrS5USJ4VM. 

13See Exhibit O, Folder 8. Also available at: 

http://www.youtube.com/watch?v=HjGYbGe1VwE. 

14See Exhibit O, Folder 9. Also available at: 

http://www.youtube.com/watch?v=miTfUrJ6VKA. 

breweries. See, New York Times, ‘‘With 

Some Risk To Its Image, Altoids Is Moving 

to the U.S., Bosman, J., October 5, 2005.5 The 

Lo ̈wenbra ̈u Brand, once an effective 

competitor in the import space, effectively 

disappeared when it began being brewed in 

the U.S. and never recovered, even after the 

brand was taken over in 1999 by Labatt 

Breweries of Canada. As the New York Times 

noted, ‘‘[a]ny whiff of inauthenticity can 

damage a brand in the case of finicky beer 

drinkers, for whom the line between domestic 

and imported brands is sacrosanct.’’ Id. 

(emphasis added). As Mr. Mazzoni notes, the 

loss of authenticity vastly outweighed the 

lowered cost, and the brand disappeared as 

an effective competitor. The result was 

similar for Wurzburger Hofbrau, another 

German beer, when Anheuser-Busch began to 

import it in bulk for repackaging in the U.S. 

If Labatt is permitted to be brewed in the 

U.S., its demise as a viable competitor will 

be assured. (Mazzoni Letter at 2–3.) 

Canadian-Origin Emphasis in the Marketing 

of Labatt 

The Labatt Brand has deep roots as a 

Canadian-brewed beer, starting with its 

founder John Kinder Labatt, who purchased 

the Simcoe Street brewery in London, 

Canada in 1847. During the Canadian 

prohibition from 1915 through 1927, the 

Labatt brewery survived by exporting its 

product and by producing ‘‘temperance ales’’ 

(brews with less than two per cent alcohol) 

for sale in Ontario. In 1979, Labatt Blue 

claimed the top spot in the Canadian beer 

market, a position it has held ever since. 

The Labatt Brand has continuously and 

emphatically emphasized its deep Canadian 

roots in its advertising and product 

placement. Labels of Labatt Blue, Labatt Blue 

Light and other Labatt products prominently 

feature a distinctive red maple leaf design 

synonymous with the Canadian national flag, 

with the words ‘‘IMPORTED,’’ ‘‘IMPORTED 

DAILY FROM CANADA’’ or ‘‘CANADA’S 

PILSNER’’ in block print on the face of the 

label. (See Exh. A.). Print advertisements and 

bar decorations for Labatt, such as branded 

mirrors and neon signs, also prominently 

feature the Canadian maple leaf and the 

words ‘‘Imported,’’ ‘‘Imported from Canada’’ 

or ‘‘IMPORTED DAILY FROM CANADA.’’ 

(See Exh. B.). Commemorative bottles of 

Labatt have featured the actual Canadian 

national flag (See Exh. C.). Labatt has also 

had a long history of support for ice hockey, 

the national winter sport of Canada, by 

sponsoring the 1972 Summit Series as well 

as four Canada Cup international ice hockey 

tournaments. (See Exh. D.). 

Several television commercials for Labatt 

Blue in the United States feature a popular 

character in a bear costume, involved with 

Labatt Blue in various ways (on the golf 

course, in a bar, on a date, etc). In one 

commercial, the announcer proclaims 

‘‘Today, Labatt announced the extension of 

Labatt Blue into the U.S. market,’’ to which 

the bear character reacts with surprise, 

departs the woods of Canada, and proceeds 

to tour the United States talking to people 

about Labatt Blue. The bear tells one 

American citizen, ‘‘I love Canada; it’s my 

home’’ but proclaims that he can ‘‘get the 

best part of Canada and live in the States.’’ 

The commercial closes with a glass of beer 

in front of a waving Labatt Blue flag featuring 

the red Canadian maple leaf, as the 

announcer states ‘‘Labatt Blue. Pure Canada.’’ 

(See Exh. E.).6

In another television commercial, the bear 

character receives a gift of a red and white 

necktie covered with the distinctive 

Canadian maple leaves. (See Exh. F.).7 In 

another commercial, the bear character gulps 

down a Labatt Blue immediately after the 

beer is introduced to the viewers as ‘‘The 

clean, crisp lager imported daily from 

Canada.’’ 8 In another, the bear character 

serves Labatt Blue in a bar, calling it 

‘‘Canada’s finest.’’ 9 Another, not involving 

the bear character, prominently displays an 

entire refrigerator full of the product with the 

caption ‘‘IMPORTED DAILY FROM 

CANADA.’’ (See Exh. G.).10 In another 

commercial, the bear character carries a sixpack of Labatt Blue to a party and is 

introduced as being ‘‘from Canada.’’ The 

advertisement asks ‘‘want your own taste of 

Canada?’’ and states ‘‘you can win your own 

lodge in the Labatt Blue Lodge Sweepstakes.’’ 

(See Exh. H.).11

Other television commercials feature 

realistic talking animals (fish, deer) who 

plead with humans to enjoy themselves 

outside, as the voiceover urges, ‘‘imported 

daily from Canada * * * come on up’’ (See 

Exh. I.).12 In a 1994 television commercial 

not involving any animal characters, a 

Canadian man sits in his back yard imagining 

the U.S./Canada border crossing station 

(pictured in Exh. J.) 13 thinking the following 

thought, which is read as a voiceover: 

Sometimes I wish my back yard stretched 

right up to the U.S.-Canadian border. I’d sit 

on my lawn chair with a cold Labatt Blue. 

I’d watch some tourists, flash a smile at our 

customs agents, and taunt and tease the 

Americans with perhaps the finest example 

of a true Canadian lager. And if that doesn’t 

rile them, I’ll just stick in a tape of last year’s 

World Series. Or, maybe the one before that. 

Labatt’s international advertisements 14

focus on Canadians doing a hard day’s work 

(or a fun night of partying) in actual 

Canadian cities, as stated in the 

advertisements, including a helicopter rescue 

of a bear cub in ‘‘Wawa, Ont.’’ (See Exh. K.), 

a sunset campfire on the beach in ‘‘Point 

Prim, P.E.I.’’ (See Exh L.), at ‘‘Expo ’86, 

Vancouver’’ (See Exh. M.), and roadies 

setting up a concert in ‘‘Vancouver, B.C.’’ 

(See Exh. N.), among other Canadian 

locations. 

The ‘‘Free Market’’ Will Not Protect the 

Labatt Brand 

The Department and the Court should not 

rely on the ‘‘free market’’ to address the 

significant possibility that the Acquirer will 

not maintain the Labatt Brand as a Canadian 

import. With the sale volume and other 

relevant factors specific to the Labatt Brand 

products, the Acquirer’s options are limited. 

Our clients are not aware of breweries with 

substantial capacity in Canada other than 

InBev’s Labatt Brand brewery and Molson/ 

Coors’ breweries. Neither InBev nor Molson/ 

Coors will have an incentive to assist the 

Acquirer in maintaining the Labatt Brand. 

Other Canadian breweries are likely too small 

to replace the approximately 20 million cases 

of the Labatt Brand products sold in the 

United States each year. Even if another 

Canadian brewer could be found, the loss of 

the economies of scale resulting from InBev’s 

production of the same beer for the Canadian 

market will result in higher prices for the 

Labatt Brand in the U.S. (See Mazzoni Letter 

at 3.) 

Conclusion 

The comments of our clients are limited 

and only bear on issues concerning one 

specific aspect of the Proposed Final 

Judgment. We believe that our comments are 

consistent with the Division’s intent as 

expressed in the Proposed Final Judgment. In 

short, the Acquirer of the Divested Assets 

must maintain the Labatt Brand as a 

Canadian import, and ideally continue to 

have the Labatt Brand continue to be brewed 

by InBev’s Canadian Labatt brewery, if the 

Division is to achieve its goal. 

One material risk presented by the 

Proposed Final Judgment is that an Acquirer 

with excess U.S. brewing capacity will use 

the Labatt Brand to fill that capacity in order 

to obtain short-term economic benefits at the 

long-term expense of the Labatt Brand. This 

will weaken—and likely cripple—the Labatt 

Brand as a viable competitor. Such a result 

will increase concentration in the relevant 

market and likely result in higher and lesscompetitive pricing. 

The simple solution is to give the Acquirer 

the right to extend its right to purchase the 

Labatt Brand brewed by InBev (which, after 

all, will still be brewing it for sale in Canada 

and elsewhere) in Canada beyond the present 

three-year period, and, in any event, to 

ensure that the Acquirer maintains the Labatt 

Brand as a Canadian import. Implementation 

of changes consistent with these comments 

will increase the likely success of the 

divestiture. 

10296 Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 

Thank you for your consideration. 

Sincerely, 

Andre R. Jaglom. 

M.J. Mazzoni, Inc. 

2637 Northwind Road, Lexington KY 40511, 

Phone: (859) 294–6888, Fax: (859) 294– 

0336, e-mail: mazzco@windstream.net. 

January 22, 2009 

Andre R. Jaglom 

Tannenbaum, Helpern, Syracuse & 

Hirschtritt, LLP, 900 Third Avenue, New 

York, NY 10022. 

Dear Mr. Jaglom: 

As you requested, I have reviewed the 

potential impact of the Department of 

Justice’s required divestiture of Labatt U.S.A. 

(LUSA) by INBEV N.V./S.A. (INBEV) as a 

condition to the INBEV acquisition of 

Anheuser-Busch, Inc. My qualifications 

regarding this assignment are described in 

the attached curriculum vitae. 

Specific to the Department of Justice 

ruling, the required divestiture of LUSA by 

INBEV, as presently constructed, will have 

two unintended consequences. These will 

result from the fact that the divestiture order 

contemplates that the acquirer must find 

alternative brewing arrangements for the 

Labatt brands within three years, and may do 

so immediately. The first unintended 

consequence will be the loss of authenticity 

as a true Labatt product and, if brewed in the 

U.S., as a Canadian imported beer. It is 

important to emphasize that ‘‘Canadian 

Import’’ is the core of the Labatt brand 

identity. The second unintended 

consequence, ironically contrary to the intent 

of the divestiture order, will be an increase 

in the price of the Labatt brands for 

consumers, not only in New York and the 

northern tier markets, but throughout the 

U.S. Combined, the loss of authenticity and 

higher prices will prevent the Labatt brands 

from continuing as viable competitors in 

those U.S. markets in which they are now a 

strong competitive force. The result will be 

a reduction in competition in these markets 

and a substantial negative economic impact 

on all current Labatt distributors (regardless 

of whether they also distribute for AnheuserBusch, Miller/Coors, or any other suppliers). 

This will ultimately result in the elimination 

of jobs, decreased profitability, loss of equity 

value and, in some cases, distributor failure. 

These consequences will be the result of two 

dynamics: a significant loss of volume and 

the higher cost of goods sold to distributors— 

both of which are inevitable if the acquirer 

shifts production away from the current 

Labatt brewery, whether after three years or 

sooner. The result will be even more extreme 

if production is shifted out of Canada and 

into the United States. 

Having the Labatt brands brewed by 

anyone other than the Labatt Brewing 

Company Limited (‘‘Labatt Canada’’), and 

especially by a brewery in the U.S., will raise 

the very real issue of authenticity. Labatt 

Canada is an iconic company. Sourcing the 

Labatt brands from any other brewer, and 

particularly any brewer outside of Canada, 

would negate the authenticity of the beer 

sold in the U.S. and it should be expected 

that significant numbers of Labatt drinkers 

would reject the product on that basis. It can 

also be assumed that if Labatt is brewed in 

the U.S., the MillerCoors Brewing Company 

would use advertising to inform U.S. 

consumers that its own Molson brands were 

the only authentic Canadian beers brewed in 

Canada and sold in the U.S. This would be 

a powerful message which would certainly 

drive consumers that prefer Canadian beers 

from the Labatt brands. 

The worst possible scenario for the Labatt 

brands and U.S. distributors would be 

contract brewing the Labatt brands from a 

U.S. supplier or having a brewer acquirer 

brew the Labatt brands in its own U.S. 

brewery. Simply stated, the overwhelming 

majority of Labatt consumers drink Labatt 

because the brands are Canadian. While any 

Canadian contract brewer other than Labatt 

Canada would create problems for the brands 

regarding authenticity, Labatt brewed in the 

U.S. would be insulting to the Labatt brands’ 

loyalists. All of the Labatt brands’ packaging, 

promotion, and advertising prominently uses 

the word ‘‘Canada’’ and emphasizes their 

Canadian origin. Indeed, the Labatt 

advertising slogan is ‘‘imported daily from 

Canada’’. It is important to note that the 

consumer has been constantly and 

consistently presented with Canada as the 

country of origin; and, Canada is also a 

concept in itself which is reinforced in Labatt 

advertising by imagery including blue skies, 

water, crispness, bears, cold, and the bigness 

of the country. Canada is the primary 

marketing component of the Labatt equity 

which has been promoted by LUSA, its 

importer predecessors and the U.S. 

distributors for decades. 

The situation is reminiscent of the demise 

of the Lowenbrau brand in the 1970s. 

Lowenbrau, an authentic German beer, was 

among the leading imported beers in the 

United States at that time. After Lowenbrau 

was acquired by the Miller Brewing 

Company (Miller), production was shifted 

from Germany to Miller breweries in the U.S. 

Miller’s objective was to reposition the brand 

at domestic super premium levels based on 

their assumption that reducing prices for this 

well-respected brand would result in a 

consumer buying frenzy. While this initiative 

did allow Miller to lower production costs 

and save freight, therefore, effectively 

reducing the price of the beer, its authenticity 

as a German imported beer was demolished. 

U.S. brewed Lowenbrau rapidly lost volume 

and market share, going from one of the 

leading and most respected imported beers to 

an insignificant market presence in a matter 

of a few years. The failure of Lowenbrau was 

the unintended consequence of Miller 

Brewing Company’s sacrificing authenticity 

for cost and convenience. It should also be 

noted that Anheuser-Busch, Inc. had a 

similar experience and result when it tried to 

import Wurzburger Hofbrau (another German 

beer) in concentrated bulk for repackaging at 

its U.S. breweries. Consumers flatly rejected 

Wurzburger Hofbrau as unauthentic. The 

same consequences can be expected for the 

Labatt brands on a much larger scale because 

of their higher volume and margin 

contribution if production is shifted to the 

United States. 

In view of this not-so-distant beer industry 

history regarding Lowenbrau and Wurzburger 

Hofbrau, one would expect any acquirer of 

the Labatt brands to recognize the need to 

keep production in Canada. Dynamics 

beyond marketing and sales implications, 

however, create the possibility that a small 

U.S. brewer could realize short term 

operating benefits to the brewer which would 

likely be far less than the long term harm to 

the many U.S. Labatt distributors and to 

viable competition from the Labatt brands. It 

is rumored that the High Falls Brewing 

Company/Genessee Brewing Company of 

Rochester, New York is among the potential 

acquirers and other small brewers have also 

been mentioned. Their sole interest would be 

to increase production to create economies 

and efficiencies which would lower cost for 

their domestic brands. The tradeoff between 

short term brewing profits for a small U.S. 

brewer and Labatt brand authenticity would 

be a poor bargain for the U.S. Labatt 

distributors and consumers. 

In addition to the concern about brand 

authenticity, without question, Labatt Canada 

is the lowest cost producer for the Labatt 

brands. The scale advantages from the Labatt 

volume sold in Canada ensure that all 

packaging and raw materials will always be 

cheaper for Labatt Canada than for any other 

contract brewer. In this case, the cost 

advantage is magnified because Labatt 

Canada’s transfer price to LUSA was 

essentially at cost which allowed LUSA to 

spend more for advertising and sales 

promotion in the U.S. Any contract brewer to 

the Labatt licensee (including Labatt Canada) 

will include a brewing profit margin 

(estimated at 15–20%) which will be passed 

through to distributors. Further, the licensee 

will still have advertising and sales 

promotion expenses to support the brands, as 

would any brewer or importer. If brewing is 

shifted to another Canadian brewer, the cost 

of freight will also increase to most U.S. 

distributors because the likely contract 

brewers in Canada are located further from 

the majority of the Labatt volume than is 

Labatt Canada. Finally, it must be assumed 

that the acquirer of LUSA will have 

significant debt service which could also 

result in higher prices to distributors (or 

lower marketing support). Regardless of the 

contributing factors, a higher cost of goods 

for the Labatt U.S. distributors will create 

higher prices to consumers which will, in 

turn, cause volume declines for the Labatt 

brands. The likely (and most serious) 

scenario for distributors as a result of higher 

product cost will be lower margins and 

declining sales volume. 

The impact of higher consumer prices for 

the Labatt brands must also be considered in 

the context of historical price positioning in 

northern tier markets. The Labatt brands have 

always been positioned at the price point of 

the leading domestic (U.S.) premium beers 

which include Budweiser, Bud Light, Miller 

Genuine Draft, Lite, Coors, and Coors Light 

and Labatts’ primary Canadian competition, 

the Molson Canadian brands. Forcing the 

Labatt brands to price points above historical 

competition would create a price value 

anomaly for Labatt drinkers and many will 

choose other premium priced beers instead of 

their customary Labatt brand. This would 

have an immediate and permanent negative 

Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 10297 

impact on brand volume and competiveness 

and, therefore, distributor profitability and 

viability. 

While some price increase is unavoidable 

given the divestiture, permitting the acquirer 

to continue to have the Labatt brands brewed 

by Labatt Canada, and requiring Labatt 

Canada to continue to brew them, beyond the 

current three year horizon will minimize that 

increase, because of the economies of scale 

provided by Labatt Canada’s production for 

the Canadian market. 

Conclusions: 

If the Labatt brands are brewed by any 

brewer other than Labatt Canada, the volume 

and margin in the northern tier markets will 

likely decline by 30–50% within three years. 

The decline will be steeper if the Labatt 

brands are brewed in the U.S. The result will 

be the demise of an effective competitor— 

precisely the opposite of the intended 

purpose of the divestiture. The implications 

for the northern tier Labatt distributors are 

obvious. The Department of Justice must 

recognize that most of the northern tier 

distributors have sold the Labatt brands for 

many years and that volume and margin 

contribution is critical to each independent 

business. In fact, for many distributors, the 

Labatt portfolio contributes more than 50% 

of total gross margin (in the case of 

Rochester, which has no other major 

supplier, the Labatt brands are more than 

80% of total gross margin) and the loss of 30– 

50% of gross margin would severely impact 

profitability, jobs, competitiveness and the 

value of the business(es). The potential for 

this to become reality is a virtual certainty if 

the licensee contracts any brewer except 

Labatt Canada, especially if production is 

shifted to the U.S. 

Therefore, if the divestiture is enforced, the 

licensee should be permitted to contract the 

brewing for the Labatt brands from Labatt 

Canada well beyond the present three year 

period, and Labatt Canada should be required 

to continue to brew the Labatt brands for the 

acquirer. This is the only way to ensure the 

lowest possible transfer price to distributors, 

maintain brand authenticity, promote healthy 

competition, ensure each current 

distributor’s business viability, preserve 

distributor equity, and protect consumers 

from higher prices. 

Michael J. Mazzoni 

MJM/nm 

M.J. MAZZONI C.V. 

M.J. MAZZONI is an independent broker 

specializing in the valuation, purchase and/ 

or sale of U.S. malt beverage distributors. 

Additionally, Mazzoni works with brewers in 

North America and Asia advising on sales 

organization and strategy, distributor 

relations, and long-range planning. Brewer/ 

Importer clients include Heineken, U.S.A.; 

Cerveceria Cuauhtemoc Moctezuma S.A. de 

C.V., and D.G. Yuengling and Son, Inc. 

Mazzoni is also an active and founding 

partner of SEEMA International, Ltd., a Hong 

Kong consultancy specializing in strategic 

planning for multi-national brewers doing 

business in China and other Asian countries. 

After receiving a Masters Degree in 

Business Administration in 1973, Mazzoni 

joined the beer industry and held a variety 

of sales, marketing and general management 

positions with Anheuser-Busch, Inc. (1973– 

80), The Pabst Brewing Company (1980–82) 

and Barton Beers, Ltd. which he established 

in 1983. Under his direction, Barton Beers, 

Ltd. became the second largest beer importer 

(Corona) in the U.S. within four years. The 

success of Barton Beers, Ltd. led to a 

management buyout of the company’s 

parent, Barton Brands, Ltd. (a distilled spirits 

and wine company) in 1987 and Mazzoni 

participated in the buyout as a principal in 

the transaction. 

Since selling his interest in Barton, Inc. in 

1991, Mazzoni has been an investor-partner 

in AFP, Inc., an Ohio beer distributorship 

(1992–2000); worked as a consultant 

assisting the Miller Brewing Company (1993– 

2002) with its distribution system 

reorganization, sales strategies, and 

distributor reconfiguration wherein he 

negotiated and facilitated the purchase and/ 

or sale of independent Miller beer 

distributorships (including Miller-owned 

branch operations) and the sale or exchange 

of individual brand rights between 

distributors throughout the U.S. Mazzoni 

thus has in-depth experience in the sales and 

marketing of domestic and imported beers at 

both the supplier and wholesale distributor 

tiers of the industry. 

333 Albert Avenue, Suite 500, East Lansing, 

MI 48823–4394 (517) 351–6200, Fax 

(517) 351–1195, 

www.willinghamcote.com. 

Anthony S. Kogut, 

(517) 324–1046—Direct Dial 

akogut@willinghamcote.com—E-mail 

January 16, 2009 

Via Hand Delivery and U.S. Mail 

Mr. Joshua H. Soven, Esq. 

Chief 

Litigation I Section 

Antitrust Division 

U.S. Department of Justice 

1401 H Street, NW 

Suite 4000 

Washington, DC 20530 

RE: Written Comments on Proposed Final 

Judgment United States of America v 

InBev N.V./S.A., et al. U.S.D.C. for D.C., 

Case: 1:08-cv-01965 

Dear Mr. Soven: 

This letter is submitted on the Proposed 

Final Judgment in the above-referenced 

action which requires InBev N.V./S.A. to 

divest all assets associated with the Labatt 

Brand consistent with the Antitrust 

Procedures and Penalties Act, 15 U.S.C. Sec. 

16 (b)–(c). 

This office represents Tri-County Beverage 

Company, a Labatt USA wholesaler 

headquartered in Dearborn and Warren, 

Michigan. Tri-County Beverage services the 

Detroit, Michigan, metropolitan area which is 

an important market for the Labatt Brand. 

The Labatt Brand is a critical and integral 

component of Tri-County Beverage’s 

portfolio, with the Labatt Brand accounting 

for about 50% of Tri-County Beverage’s 

annual sales (approximately 2.5 million cases 

out of 5.5 million cases of total sales). 

We are in receipt of a copy of the January 

15, 2008 letter sent to you by Mr. James 

Coyne King on behalf of his clients, Esber 

Beverage Company, RL Lipton Co, and Tri 

County Distributing, Co. We write because 

we share many of the concerns raised by Mr. 

King in his letter. 

We agree with the observation that the 

Acquirer of the Labatt Brand must be wellpositioned to support and market the Labatt 

Brand ‘‘so that the position of the Labatt 

Brand is maintained and enhanced.’’ The 

Labatt Brand is a niche product with a 

specific set of characteristics that make the 

Brand appealing in particular markets, such 

as Michigan. Much of the Labatt’s Brand 

competitive position derives from its status 

as a Canadian import. As such, it is 

particularly popular in states (such as 

Michigan) which border or are in close 

proximity to Canada. We agree that the 

‘‘Labatt Brand products also have a price 

point more akin to domestic premium brands 

* * * than most imported beers’’. The Labatt 

Brand market position, as a Canadian import 

for the price of a domestic, has been the 

‘‘lynchpin’’ of the Labatt’s Brand success. 

(See page 2 of Mr. King’s letter). We concur 

in the comments made on pages 4 through 6 

of Mr. King’s January 15th letter which 

support the concept ‘‘that the viability of a 

divested business line as a competitor is 

crucial to the usefulness of divestiture as a 

cure for an antitrust violation’’ and his 

comments concerning the need to have a 

viable Acquirer to effectuate that principle 

and reach that goal of divestiture. 

Wholesalers have spent many years—with 

a commensurate expenditure of time, money 

and effort—nurturing and building the Labatt 

Brand to make it the success it is today in 

states like Michigan. For example, TriCounty Beverage spent approximately 

$400,000 to advertise and promote the Labatt 

Brand in 2008 to complement the 

approximately $2 million dollars spent by 

Labatt to advertise and promote the Labatt 

Brand in metropolitan Detroit during that 

same period. Similar sums were expended by 

Tri-County Beverage and Labatt in previous 

years. To maintain the Labatt’s Brand 

competitive viability it is critical that it 

continue as a Canadian import and that the 

Acquiring entity continue the strategies and 

pricing which have made the Labatt Brand a 

success. Should an inappropriate Acquirer 

obtain the Labatt Brand and not follow the 

strategies and pricing that have heretofore 

made the Brand successful (through the 

efforts of the existing wholesaler network), it 

will have a devastating effect on the Labatt 

Brand market share and competition in the 

industry. 

Given the well thought out submission 

presented by Mr. King we have kept our 

comments to a minimum. We urge that the 

referenced comments be considered to help 

guide the decision making process. 

Tri-County Beverage stands ready and 

willing to meet with you or to supplement 

this letter with other information you may 

deem useful. 

Thank you for your attention to this matter. 

Very truly yours, 

Willingham & Cote ́, P.C. 

/s/ 

Anthony S. Kogut 

10298 Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 

ASK/nlh 

cc: Mr. James Coyne King 

Mr. Ron Feldman 

[FR Doc. E9–5018 Filed 3–9–09; 8:45 am] 

BILLING CODE 4410–11–P 

DEPARTMENT OF JUSTICE 

Antitrust Division 

Notice Pursuant to the National 

Cooperative Research and Production 

Act of 1993—Institute of Electrical and 

Electronics Engineers 

Notice is hereby given that, on 

February 9, 2009, pursuant to Section 

6(a) of the National Cooperative 

Research and Production Act of 1993, 

15 U.S.C. 4301 et seq. (‘‘the Act’’), 

Institute of Electrical and Electronics 

Engineers (‘‘IEEE’’) has filed written 

notifications simultaneously with the 

Attorney General and the Federal Trade 

Commission disclosing additions or 

changes to its standards development 

activities. The notifications were filed 

for the purpose of extending the Act’s 

provisions limiting the recovery of 

antitrust plaintiffs to actual damages 

under specified circumstances. 

Specifically, 34 new standards have 

been initiated and 9 existing standards 

are being revised. More detail regarding 

these changes can be found at http:// 

standards.ieee.org/standardswire/sba/ 

12–10–08.html and http:// 

standards.ieee.org/standardswire/sba/ 

01–30–09.html. 

On September 17, 2004, IEEE filed its 

original notification pursuant to Section 

6(a) of the Act. The Department of 

Justice published a notice in the Federal 

Register pursuant to Section 6(b) of the 

Act on November 3, 2004 (69 FR 64105). 

The last notification was filed with 

the Department on November 17, 2008. 

A notice was published in the Federal 

Register pursuant to Section 6(b) of the 

Act on December 11, 2008 (73 FR 

75469). 

Patricia A. Brink, 

Deputy Director of Operations, Antitrust 

Division. 

[FR Doc. E9–4853 Filed 3–9–09; 8:45 am] 

BILLING CODE 4410–11–M 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

[TA–W–63,422] 

Springs Global U.S., Inc., Springs 

Direct Division, Springmaid Wamsutta 

Factory Store, Lancaster, SC; Notice of 

Revised Determination on Remand 

On February 6, 2009, the U.S. Court 

of International Trade (USCIT) 

remanded to the U.S. Department of 

Labor (Department) for further review 

Former Employees of Springs Global, 

Inc., Springs Global Direct Division, 

Springmaid-Wamsutta Factory Store, 

Lancaster, South Carolina (FEO Springs 

Global) v. United States, Court No. 08– 

00255. 

On May 19, 2008, an official of 

Springs Global U.S. Inc. (subject firm) 

filed a petition for Trade Adjustment 

Assistance (TAA) and Alternative Trade 

Adjustment Assistance (ATAA) on 

behalf of workers of Springs Global U.S. 

Inc., Springs Global Direct Division, 

Springmaid-Wamsutta Factory Store, 

Lancaster, South Carolina (subject 

facility). 

The subject facility closed during 

February 2008. Prior to the closure, 

workers at the subject facility managed 

Springs Global, U.S., Inc. (subject firm) 

retail operations, sold linen products 

manufactured by the subject firm to the 

public and other subject firm 

employees, and handled special orders 

for linen products placed by other 

subject firm employees. 

The negative determination, issued on 

May 30, 2008, stated that in order to be 

considered eligible to apply for 

adjustment assistance under Section 223 

of the Trade Act of 1974, the subject 

worker group must work for a ‘‘firm’’ or 

appropriate subdivision that produces 

an article domestically and there must 

be a relationship between the workers’ 

work and the article produced by the 

workers’ firm or appropriate 

subdivision. The determination also 

stated that although the subject firm 

produced an article, the subject workers 

did not support that production. The 

Department determined that the subject 

worker group cannot be considered 

import impacted or affected by a shift in 

production of an article. The 

Department’s Notice of determination 

was published in the Federal Register 

on June 16, 2008 (73 FR 34044). 

The Department did not receive a 

request for administrative 

reconsideration. 

In the complaint, Plaintiffs allege that 

workers at the subject facility, who 

‘‘provided the means by which Springs 

Global dispensed of manufactured 

goods that were not able to be sold 

otherwise * * * thereby enabling the 

company’s production operations * * * 

to reduce their per-unit overhead and 

operate more efficiently,’’ should be 

treated like the workers covered by TA– 

W–62,768 (Springs Global U.S., Inc., 

Springs Direct Division, Corporate 

Support Group, Lancaster, South 

Carolina; certified February 14, 2008). 

Workers covered by TA–W–63,422 are 

located in the same building as workers 

covered by TA–W–62,786. 

Workers covered by TA–W–62,786 are 

engaged in production estimation, 

production scheduling, distribution, 

logistics, and operational services. The 

determination for TA–W–62,786 stated 

that the workers supported production 

at a TAA-certified facility (Springs 

Global U.S., Inc., Grace Complex, 

Bedding Division, Lancaster, South 

Carolina; TA–W–61,258) and that the 

worker separations are ‘‘related to a shift 

of production and increased imports of 

textile products.’’ 

The group eligibility requirements for 

directly-impacted workers under 

Section 222(a) the Trade Act of 1974, as 

amended, based on a shift of production 

are satisfied if the criteria set forth 

under Section 222(a)(2)(B) have been 

met: 

A. a significant number or proportion of 

the workers in such workers’ firm, or an 

appropriate subdivision of the firm, have 

become totally or partially separated, or are 

threatened to become totally or partially 

separated; and 

B. there has been a shift in production by 

such workers’ firm or subdivision to a foreign 

country of articles like or directly 

competitive with articles which are produced 

by such firm or subdivision, and one of the 

following must be satisfied: 

1. the country to which the workers’ firm 

has shifted production of the articles is a 

party to a free trade agreement with the 

United States; 

2. the country to which the workers’ firm 

has shifted production of the articles is a 

beneficiary country under the Andean Trade 

Preference Act, African Growth and 

Opportunity Act, or the Caribbean Basin 

Economic Recovery Act; or there has been or 

is likely to be an increase in imports of 

articles that are like or directly competitive 

with articles which are or were produced by 

such firm or subdivision. 

On remand, the Department carefully 

reviewed the language of the statute, the 

Department’s policy, Plaintiffs’ 

submissions, and the administrative 

record. 

The intent of the Department is for a 

certification to cover all workers of the 

subject firm or appropriate subdivision 

who were adversely affected by 

increased imports of the article