Page 1 - COMPLAINT FOR INJUNCTIVE RELIEF TO PROHIBIT THE ACQUISITION OF 

SABMILLER PLC BY ANHEUSER-BUSCH INBEV, SA/NV AS A VIOLATION OF 

SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

Joseph M. Alioto, SBN #42680, Pro hac vice pending

jmalioto@aliotolaw.com 

ALIOTO LAW FIRM

One Sansome Street 

San Francisco, CA 94104 

Telephone: (415) 434-8900 

Facsimile: (415) 434-9200 

Christopher L. Cauble, OSB No. 962374 

ccauble@thecaublefirm.com 

Rachele R. Selvig, OSB No. 095016 

rselvig@thecaublefirm.com 

CAUBLE & CAUBLE, LLP 

111 SE Sixth Street 

Grants Pass, OR 97526 

Telephone: (541) 476-8825 

Facsimile: (541) 471-1704 

[See additional attorneys listed on signature page] 

Attorneys for Plaintiffs 

UNITED STATES DISTRICT COURT 

DISTRICT OF OREGON 

MEDFORD DIVISION 

JAMES DEHOOG, BRIAN BOUTELLER,

SHONNA BOUTELLER, CARLY BOWEN,

TOM BUTTERBAUGH, ERICA I. CORONA, 

MARIA G. CORONA, CHRIS DENNETT,

JOHN DESBIENS, MATTHEW JOHNSON, 

CYNTHIA A. KREITZBERG, EDWARD 

LAWRENCE, JERUSHA MALAER, ROBERT

MALAER, MICHAEL MARTIN, MICHAEL 

MCATEE, DAVID MILLIGAN, JEFF

REEDER, RALPH REEDER, WADE 

SCAGLIONE, BETH H. SILVERS, BRADLEY

O. SILVERS, and PATRICE WADE; 

 

Plaintiffs; 

 v. 

ANHEUSER-BUSCH INBEV, SA/NV and 

SABMILLER PLC; 

 

Defendants. 

Case No. 1:15-cv-02250

COMPLAINT FOR INJUNCTIVE

RELIEF TO PROHIBIT THE

ACQUISITION OF

SABMILLER PLC BY

ANHEUSER-BUSCH INBEV, SA/NV 

AS A VIOLATION OF SECTION 7 

OF THE CLAYTON ANTITRUST 

ACT, 15 U.S.C. § 18

Case 1:15-cv-02250-CL Document 1 Filed 12/01/15 Page 1 of 32
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SABMILLER PLC BY ANHEUSER-BUSCH INBEV, SA/NV AS A VIOLATION OF 

SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

 

 COME NOW the plaintiffs by and through their undersigned attorneys, bring this civil 

action under the federal antitrust laws to enjoin the planned acquisition by the nation’s largest beer 

company, defendant Anheuser-Busch InBev, SA/NV (“ABI”), of the nation’s second largest 

defendant, SABMiller, plc (“SAB”), and to obtain equitable and other relief as appropriate. 

SUMMARY OF ACTION 

1. 

 This is a private antitrust suit brought under Section 16 of the Clayton Antitrust Act (15 

U.S.C. § 26) to permanently prohibit the proposed acquisition by ABI, the largest brewer in the 

United States and world, of the second largest brewer in the United States, SAB—which includes 

Miller Coors, LLC, a joint venture between SAB and Molson Coors Brewing Co.—in violation of 

Section 7 of the Clayton Antitrust Act (15 U.S.C. § 18), in that the acquisition may, and most 

probably will, substantially lessen competition and/or tend to create a monopoly in the production, 

distribution, and sale of beer in the United States. 

2. 

 The United States is the most profitable beer market in the world. 

3. 

 The U.S. beer industry—which serves tens of millions of consumers at all income 

levels—is highly concentrated with the two defendant firms accounting for approximately 71 

percent of all sales volume nationwide. The proposed acquisition by ABI of SAB significantly 

threatens consumer welfare by the threatened increase in price, deterioration of quality, 

curtailment of innovation, destruction of consumer choice, and the elimination of actual and 

potential competitors and significant rivals in a non-trivial transaction. By combining the largest 

and the second-largest brewers of beer sold in the United States, the defendant, ABI, would be a 

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SABMILLER PLC BY ANHEUSER-BUSCH INBEV, SA/NV AS A VIOLATION OF 

SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

global beer behemoth with a market value of roughly $275 billion, and 71 percent of the beer 

market in the United States, sufficient monopoly power to exclude competition and raise prices. 

Plaintiffs, therefore, seek to enjoin this acquisition and prevent a serious violation of Section 7 of 

the Clayton Act. 

4. 

 For the foregoing and following reasons, the proposed acquisition may substantially lessen 

competition or tend to create a monopoly in violation of Section 7 of the Clayton Act. 

JURISDICTION 

5. 

 This action is brought under Section 16 of the Clayton Antitrust Act, 15 U.S.C. § 26, to 

prevent the defendants from consummating the acquisition as a violation of Section 7 of the 

Clayton Antitrust Act, 15 U.S.C. § 18. This Court has subject matter jurisdiction of the federal 

antitrust claims asserted in this action under Section 16 of the Clayton Antitrust Act, 15 U.S.C. § 

26, and 28 U.S.C. §§ 1331 and 1337. 

6. 

 This Court has personal jurisdiction over the defendants. Defendants do over a billion 

dollars of business annually in Oregon, have substantial ownership in companies and breweries 

located in Oregon, including Widmer Brothers (now known as the Craft Brew Alliance) and Henry 

Weinhard’s Brewing Company. Defendants also own “10 Barrels” brewing company which is a 

company that started and continues doing business in Oregon. Defendants distribute their products 

throughout Oregon and have a substantial economic business in Oregon. Defendants, therefore, 

have substantial contacts within the State of Oregon. 

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SABMILLER PLC BY ANHEUSER-BUSCH INBEV, SA/NV AS A VIOLATION OF 

SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

7. 

 Venue is appropriate in the United States District Court for the District of Oregon, Medford 

Division, pursuant to 28 U.S.C. § 1391and LR 3-2(b), because most of the plaintiffs are residents 

of Southern Oregon and counties comprising the Medford Division. Oregon is one of the largest 

craft beer producers in the world and will be significantly impacted by the actions alleged herein. 

According to Brewers Association.Org state craft and beer sales and production statistics, Oregon 

has the third largest per capita craft beer industry in the United States. Oregon is, on a per capita 

basis, among the top five states in the consumption of craft beers. As of 2014, Oregon has 216 craft 

breweries with around 75 of those breweries located in Southern Oregon. There are 1,039,063 

barrels of craft beer produced per year and the economic impact in Oregon is almost $2 billion, 

with a substantial percentage of those sales occurring in Southern Oregon. Southern Oregon is one 

of the most concentrated craft beer markets in the world. As a result of this, Southern Oregon 

consumers, as well as others from outside of Southern Oregon (including the plaintiffs), who 

purchase and consume all kinds of beer, including craft beers, will be substantially impacted by the 

acquisition alleged herein. 

PARTIES 

The Plaintiffs

8. 

 Each plaintiff named herein is an individual and a citizen of the state listed for each said 

plaintiff in Exhibit 1 which is incorporated herein by reference. Each plaintiff has purchased beer 

produced by one or both of the defendants and each plaintiff expects to continue to purchase beer 

produced by one or both of the defendants in the future. Plaintiffs are also consumers of craft beers 

made in Oregon. Each plaintiff is threatened by a loss or damage by reason of the acquisition in 

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SABMILLER PLC BY ANHEUSER-BUSCH INBEV, SA/NV AS A VIOLATION OF 

SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

that prices for beer may increase, quality may deteriorate, availability may be lessened, actual and 

potential competition and the benefit of competition may be curtailed or even eliminated, and 

consumer choice may be destroyed. 

The Defendants

9. 

 ABI is a multinational beverage and brewing company headquartered in Leuven, Belgium. 

It is the world’s largest beer brewer and has a 25 percent global market share. ABI was formed 

through successive mergers of three international brewing groups: Interbrew from Belgium, 

AmBev from Brazil, Anheuser-Busch from the United States and Grupo Modelo from Mexico. 

10. 

 Also in 2008, ABI’s predecessor, InBev, then the largest brewer in the world, acquired 

Anheuser-Busch for $50 billion, making ABI the largest brewer of beer in the United States, 

accounting for more than 46 percent of the U.S. market. In 2013, ABI acquired the portion of the 

Mexican brewer Grupo Modelo it did not already own in a deal valued at $20.1 billion. 

11. 

 ABI has 16 brands that individually generate more than $1 billion annually in revenue, out 

of a portfolio of more than 200 brands, which includes such global brands as Budweiser, Corona 

and Stella Artois, international brands such as Beck’s, Hoegaarden and Leffe, and local brands 

such as Bud Light, Modelo Especial and Michelob Ultra. Total revenue for all 200 ABI brands in 

2014 was over $47 billion. 

12. 

 ABI is the largest seller of beer in the United States, accounting for more than 46 percent of 

the market. 

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SABMILLER PLC BY ANHEUSER-BUSCH INBEV, SA/NV AS A VIOLATION OF 

SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

13. 

 SAB is a South African multinational brewing and beverage company, headquartered in 

London, England. It is the world’s second largest brewer measured by revenues, after ABI. Its 

brands include Miller, Fosters, Grolsch, Peroni and Pilsner Urquell. It has operations in 80 

countries world-wide. From the early 1990s onward, the company has increasingly expanded 

internationally, making several acquisitions in both emerging and developed markets. In 1999, it 

formed a new United Kingdom-based holding company, SAB plc. In May 2002, SAB plc acquired 

Miller Brewing Company, forming defendant SABMiller plc. 

14. 

 On July 1, 2008, SAB and Molson Coors Brewing Company, then the number two and 

three brewing companies in the United States, respectively, combined their operations and began 

operating a joint venture in the United States. The joint venture, MillerCoors, LLC, is 

headquartered in Chicago, Illinois. Its brands include: Miller Lite, Miller Genuine Draft, Olde 

English 800, Milwaukee’s Best, Miller Chill, and Hamm’s. The company also offers a variety of 

craft and import brands, including Blue Moon and Leinenkugel’s, through its Tenth and Blake 

division. MillerCoors also brews brands of beer that are owned by Pabst Brewing Company. 

MillerCoors is the second-largest beer company in the United States, with 25 percent of U.S. beer 

sales. Total revenue for all SAB brands in 2014 was over $22.31 billion. 

15. 

 In September 2014, SAB made an unsuccessful attempt to acquire a controlling stake in 

Dutch rival Heineken International, a move reported to be part of SAB’s strategy to protect itself 

from a potential takeover bid by ABI. 

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SABMILLER PLC BY ANHEUSER-BUSCH INBEV, SA/NV AS A VIOLATION OF 

SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

16. 

 On October 13, 2015, the deal by ABI to acquire SAB was first announced. On November 

11, 2015, the purchase price was reported to be approximately $108 billion. The deal would unite 

the world’s two biggest beer makers and control more than half the world’s beer profits. 

17. 

 In a summary of the transaction, released by the defendants on November 11, 2015, the 

acquisition was described as follows: 

• The boards of ABI and SAB announced that they reached agreement on the 

terms of a recommended acquisition of the entire issued and to be issued 

share capital of SAB by ABI. 

• The transaction will be implemented by means of the acquisition of SAB by 

Newco (a Belgian company to be formed for the purposes of the 

transaction). ABI will merge into Newco so that, following completion of 

the transaction, Newco will be the new holding company for the merged 

entity. 

18. 

 In the release of November 11, 2015, the defendants stated the acquisition is proposed to 

occur according to a three-stage process they described as follows: 

It is intended that the Transaction will be implemented by way of a three stage 

process involving: (i) a UK law court-sanctioned scheme of arrangement under Part 

26 of the Companies Act 2006 pursuant to which each UK Scheme Shareholder 

will receive 100 Initial Shares in Newco in respect of each of its SABMiller Shares; 

(ii) a Belgian law voluntary cash takeover offer by AB InBev for all of the Initial 

Shares pursuant to the Belgian Law of 1 April 2007 on takeover bids and the 

Belgian Royal Decree of 27 April 2007 on takeover bids pursuant to which 

SABMiller Shareholders who wish (or are deemed) to elect to do so will receive the 

Cash Consideration in return for their Initial Shares and SABMiller Shareholders 

who wish to elect to receive the Partial Share Alternative will receive the cash 

element of the Partial Share Alternative and retain the relevant proportion of their 

Initial Shares, which will become Restricted Shares; and (iii) a Belgian law reverse 

merger of AB InBev and Newco under the Belgian Companies Code pursuant to 

which AB InBev Shareholders will become shareholders in Newco and Newco will 

be the surviving entity and the new holding company of the Combined Group. 

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SABMILLER PLC BY ANHEUSER-BUSCH INBEV, SA/NV AS A VIOLATION OF 

SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

Further details of the intended structure of the acquisition were included in the release. 

19. 

 One of the conditions precedent to consummating the acquisition is compliance with the 

antitrust laws of the United States, including the absence of judicial action to prohibit the 

acquisition. 

20. 

 The Herfindahl-Hirschman Index (“HHI”) measures and grades market concentration by 

adding the squared market share percentages of each competitor in the market. The threshold for 

“highly concentrated” is an HHI of 2,500. Transactions that increase the HHI by more than 200 

points in highly concentrated markets are presumed likely to enhance market power under the 

Horizontal Merger Guidelines issued by the Department of Justice and the Federal Trade 

Commission. Here, the market concentration will substantially exceed that number. 

21. 

 The HHI of the United States beer market in 2014 was 2,751. It has been reported by 

experts that ABI’s acquisition of SAB would increase that HHI by 2,998 points and, even 

assuming a complete divestiture of SAB’s U.S.-marketed beers, the HHI would increase by at least 

200 points which in the already highly concentrated U.S. market is presumptively illegal under 

government guidelines. The post-acquisition HHI plainly indicates a market ripe for probable, if 

not certain, collusion and a galloping tendency toward monopoly. 

22. 

 The market concentration measures, coupled with the significant increases in 

concentration, demonstrate that the acquisition is presumed to be anticompetitive. 

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SABMILLER PLC BY ANHEUSER-BUSCH INBEV, SA/NV AS A VIOLATION OF 

SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

23. 

The proposed acquisition is contrary to the following long-established decisions by the 

United States Supreme Court: Brown Shoe Co. v United States, 370 U.S. 294 (1962); United States 

v. Philadelphia National Bank, 374 U.S. 321 (1963); United States v. Aluminum Co. of America,

377 U.S. 271 (1964); United States v. Von’s Grocery Co., 384 U.S. 270 (1966); United States v. 

Pabst Brewing Co., 384 U.S. 546 (1966); United States v. Falstaff Brewing Co., 410 U.S. 526 

(1973). As Judge Posner of the Seventh Circuit observed, these cases have never been overruled, 

and “[t]aken as a group, . . . establish the illegality of any nontrivial acquisition of a competitor, 

whether or not the acquisition was likely either to bring about or shore up collusive or oligopoly 

pricing. The elimination of a significant rival was thought by itself to infringe the complex of 

social and economic values conceived by a majority of the Court to inform the statutory words 

‘may . . . substantially . . . lessen competition.’” Hospital Corp of America v. FTC, 807 F.2d 1381, 

1386 (7th Cir. 1986). 

24. 

 ABI and SAB have actively competed in the United States, although not generally with 

regard to price. An interdependent pricing dynamic exists between ABI and SAB in the United 

States. These two largest brewers find it more profitable to follow each others’ prices rather than 

compete aggressively for market share by cutting price. ABI typically initiates annual price 

increases in various markets with the expectation that SAB will follow. Often it does. The 

defendants’ competition has, however, resulted in product innovations that have benefitted 

consumers across the country. The proposed acquisition would eliminate this type of competition 

by further concentrating the beer industry, enhancing ABI’s market power, and facilitating 

coordinated pricing between ABI and what will be the next largest brewer, Constellation Brands, 

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SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

Inc. (“Constellation”), which markets the Mexican brewer Grupo Modelo’s beer products in the 

United States, including the country’s largest selling import, Corona, under an exclusive license 

from ABI which owns 100 percent of Grupo Modelo (“Modelo”). 

25. 

 Plaintiffs are consumers and purchasers of defendants’ beers and are threatened with loss 

and damage in the forms of higher prices, fewer services, fewer competitive choices, diminished 

product quality and product diversity, suppression and destruction of smaller actual competitors 

through exclusive distribution arrangements, full-line forcing, and the like, and other 

anticompetitive effects and consequences that may, and most probably will, result from the 

elimination of actual and potential competition if the acquisition by ABI of SAB is consummated. 

26. 

 Before it was completely acquired by ABI in 2013 for $20.1 billion, Modelo’s then U.S. 

distributor, unlike SAB, had consistently resisted pressure to follow ABI-led price hikes. 

Modelo’s then pricing strategy, called “The Momentum Plan,” sought to maintain a narrow “price 

gap” between Modelo’s beers and ABI’s lower-priced premium domestic brands, such as 

Budweiser and Bud Light. Modelo put “increasing pressure” on ABI by pursuing a competitive 

strategy directly at odds with ABI’s well-established practice of leading prices upward. 

27. 

 Before Modelo’s acquisition by ABI, ABI and SAB were forced to offer lower prices and 

discounts for their brands to discourage consumers from “trade[ing] up” to Modelo’s brands. 

When ABI acquired the remaining interest in Modelo that it did not already own in 2013, and 

vested sole U.S. distribution rights for Modelo’s U.S. sales in Constellation Brands, this 

competitive constraint on ABI’s and SAB’s ability to raise prices was eliminated. 

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SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

28. 

 ABI’s acquisition of Modelo eliminated the substantial head-to-head competition that then 

existed between ABI and Modelo in the United States. The loss of this head-to-head competition 

enhanced the ability of ABI to unilaterally raise the prices of the brands it owned post-acquisition, 

diminished ABI’s incentive to innovate with respect to new brands, products, and packaging and, 

as alleged below, has resulted in price increases by Constellation of its Modelo brands in the 

United States, despite contrary assurances by the Department of Justice when it settled its suit to 

enjoin ABI’s acquisition of Modelo as a violation of Section 7 of the Clayton Act, that the 

acquisition would not result in increases in the price of Modelo’s products in the U.S. The 

impotent restrictions imposed by the Justice Department’s settlement with ABI and Constellation 

will “sunset” in 2023, leaving ABI legally free to reacquire so-called “divestiture assets” and 

reenter the U.S. market directly with Modelo products. 

29. 

 After settling with the government and completing its acquisition of Modelo, ABI 

continued to own distributors in key U.S. markets which allowed it to control the marketing and 

distribution of Modelo’s products and the products of small craft brewers in those markets. 

Despite warnings and complaints raised at the time of the Justice Department’s settlement in 2013 

that ABI’s continued control of these distributors would allow it to engage in anticompetitive 

activities, including by limiting craft brewers’ access to ABI-owned distributors and, in turn, 

restricting access to retail outlets, and allowing ABI to increase the price of Modelo’s products 

through ABI’s own distributors, these warnings were ignored by the Department of Justice and the 

court which ultimately approved the settlement. 

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SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

30. 

 The harms which were warned of have come to pass. The prices of ABI’s products in the 

U.S., and Modelo’s brands, have increased since the acquisition and competitors, particularly 

small craft brewers who until recently had the most robust growth in the U.S. beer market, have 

been injured by ABI’s recent practices. 

31. 

 ABI has the country’s largest network of independent distributors/wholesalers, numbering 

approximately 600. Almost all of the distributors, although independent, operate under exclusive 

agreements with ABI in which they agree not to deal with the products of any competitors and not 

to distribute any products outside of their own designated territories. In addition, ABI owns 14 

distributors/wholesalers in the following cities: Boston, Massachusetts; Canton, Ohio; Denver, 

Colorado; Eugene, Oregon; Los Angeles, California; Louisville, Kentucky; New York, New York; 

Oahu, Hawaii; Oklahoma City, Oklahoma; Pomona, California; Riverside, California; San Diego, 

California; and Tulsa, Oklahoma. 

32. 

The proposed acquisition is likely to lead to a decrease in small brewers’ access to 

distributors. The beer market in the United States is predominantly a three-tiered system because 

state regulations in most states require that the brewer sell to a distributor who then sells to 

retailers. In its challenge to ABI’s acquisition of Modelo, the Department of Justice demonstrated 

that, “[e]ffective distribution is important for a brewer to be competitive in the beer industry.” 

Large companies can and do use their market power to exert a tremendous amount of influence 

over what beer brands distributors carry. This is important because ABI and SAB’s MillerCoors 

joint venture has pursued different strategies in their dealings with distributors in the United States. 

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SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

ABI has pursued a strategy of exclusivity, and has in the past given more favorable terms to 

distributors who only sell brands owned by ABI. This 100 percent share strategy has led ABI to 

pressure distributors to drop other brewers’ brands. On the other hand, MillerCoors has permitted 

its distributors to carry rival brands. However, there are no guarantees or known provisions in the 

ABI-SAB deal to require MillerCoors to keep its strategy in place, post-acquisition. 

33. 

In fact, since the proposed acquisition contemplates SAB selling its interest in the 

MillerCoors joint venture to its co-joint venturer, Molson Coors, it is likely that a 100 percent 

Molson Coors-owned MillerCoors will follow ABI’s lead in its dealings with distributors. Before 

the MillerCoors joint venture, SABMiller and Molson Coors successfully shared distributorships 

and recognized the importance of being open to many suppliers. They likely chose this strategy, 

because each had relatively small market share compared to ABI. MillerCoors continued the same 

strategy when it was under the management of SABMiller and Molson. Given the resulting change 

in management and Molson’s new increased size and scope in the U.S. market following the 

ABI-SAB acquisition, Molson’s management is likely to have incentives to change its practices to 

match ABI’s, much as Constellation Brands did after acquiring the exclusive license to market 

Modelo’s brands in the U.S. after ABI acquired Modelo. This fall, for the first time, Constellation 

has led beer price increases, rather than acting as a deliberate restraint on price increases. As but 

one example, Molson is likely to change its policy and pressure distributers to stop carrying white 

beers that compete with Blue Moon, over which Molson will receive U.S. rights in the proposed 

deal. 

/ / / 

/ / / 

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34. 

The seriousness of the problem is exacerbated by the fact that ABI is currently the largest 

distributor in the United States, with $3 billion in sales and 135 million in case volume, and the 

largest beer supplier with approximately 45 percent of the market. After the acquisition, Molson 

will have exclusive control over 26 percent of beer sales, or more than the next eight largest 

brewers combined. 

35. 

 ABI has already embarked on a plan to restrain the distribution of competitors’ products, 

including those of craft brewers, through its own distributors, as well as through other, 

non-ABI-owned distributors whom it pressures to obstruct the distribution of competitors’ 

products. With specific reference to a potential ABI-SAB acquisition, the American Antitrust 

Institute warned the Department of Justice in November 2014, that “[o]n account of its size, ABI 

already exercises a domineering presence over its distributors. For a distributor, a falling out with 

ABI could mean losing brands that account for 40 percent of the national market—a figure that is 

certainly higher in many markets.” To further enhance the effectiveness of its anticompetitive 

practices, ABI has embarked on a plan to acquire additional distributors around the United States. 

36. 

 On October 12, 2015, the Department of Justice announced it has launched an investigation 

into ABI’s practices, including the acquisition of two distributors in the San Jose and Oakland, 

California markets. Reuters reported: 

The U.S. Justice Department is probing allegations that Anheuser-Busch InBev 

(ABI.BR) is seeking to curb competition in the beer market by buying distributors, 

making it harder for fast-growing craft brewers to get their products on store 

shelves, according to three people familiar with the matter. 

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In the past few months, the world’s largest brewer has rattled the craft beer world 

by striking deals for five distributors in three states. Many states require brewers to 

use distributors to sell their product, and once AB InBev buys a distributor, craft 

companies say they find that they can’t distribute their beer as easily and sales 

growth stalls. Antitrust regulators are also reviewing craft brewers’ claims that AB 

InBev pushes some independent distributors to only carry the company’s products 

and end their ties with the craft industry, two of the sources said, noting that the 

investigation was in its early stages. 

37. 

 Referring again to an ABI-SAB combination, the American Antitrust Institute informed 

the Justice Department: “With an even larger market share, ABI would have more power over 

distributors and more to gain from excluding rivals.” 

38. 

 Predictably, small craft brewers have been rattled by ABI’s purchases of craft beer makers, 

including Golden Road Brewing in September 2015, Blue Point Brewing in 2014 and Goose 

Island Beer Co in 2011. 

39. 

 An executive at a craft brewer is reported to have said that ABI recently bought one of its 

distributors. “It [the distributor] is slowly but surely divesting itself of everything that is not ABI. 

And we’re one of the last ones,” said the executive, who noted that its other options for distribution 

were limited. “We’re at the mercy of a lot of big players.” 

40. 

 There were approximately 4,000 craft beer companies as of September, 2015, brewing 

everything from artfully made classics like Dale’s Pale Ale, Brooklyn Lager and Gordon Biersch 

Hefeweizen, as well as more unusual brews like Breckenridge Vanilla Porter, and the super hoppy 

Palate Wrecker from Green Flash Brewing Co. 

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SABMILLER PLC BY ANHEUSER-BUSCH INBEV, SA/NV AS A VIOLATION OF 

SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

41. 

 Recently, craft brewers have been a rare bright spot in an otherwise sluggish U.S. beer 

market. While overall beer sales rose 0.5 percent in 2014, craft beer sales rose by 17.6 percent to 

capture 11 percent of the U.S. market. 

42. 

The elimination of or injury to the competition by craft brewers may substantially lessen 

competition or tend to create a monopoly in the beer market by depriving consumers of choice. 

43. 

 To retain the “craft” title, a brewery must make less than six million barrels annually. 

That means those that are taken over by a big brewer like ABI lose that identity even if they still 

make small batches with distinctive flavors. 

44. 

 These events and the Justice Department’s investigation come at a time when ABI is 

seeking to buy the number two brewer, SAB, for an estimated $108 billion in what would be the 

biggest acquisition of a beer brewer by another brewer in history. 

45. 

 ABI’s acquisition of SAB will cause competitive harm to U.S. beer consumers by further 

enhancing ABI’s ability to unilaterally raise the prices of the SAB and other brands it will own 

post-acquisition, and diminish ABI’s incentive to innovate with respect to new brands, products, 

and packaging. 

/ / / 

/ / / 

/ / / 

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46. 

 The Chief Executive Officer of ABI is Carlos Brito. By reason of his position, Mr. Brito 

controls and will control the manufacture, distribution, and sale of beer in the United States 

through ABI. 

47. 

 Both ABI and SAB are owned by foreign interests. 

48. 

 The acquisition will give complete control of SAB to ABI, and will give ABI full access to 

competitively sensitive information about the sale of SAB’s brands in the United States – access 

that ABI does not currently have. 

49. 

 More than 40 percent of the population of the United States consumes beer, including the 

beers of ABI and SAB, and each consumer will be adversely affected if the proposed unlawful 

transaction is allowed to proceed. 

50. 

 The most influential factor in the sale of beer in the United States is advertising. 

51. 

 ABI and SAB are substantial advertisers, having spent hundreds of millions of dollars in 

the last year alone. 

52. 

 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 

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largest brewer in the world. When InBev acquired Anheuser-Busch in 2008, ABI’s rank as the 

world’s largest brewer was solidified. If the acquisition were allowed, the world’s five largest 

brewers would be reduced to just two. 

53. 

 As the world’s largest brewer, ABI has enormous economic power and capabilities, with 

16 brands alone that each generate over $1 billion per year in revenue out of a portfolio of more 

than 200 brands, and total revenues in 2014 for all ABI brands of more than $47 billion. ABI’s 

post-acquisition prowess will also afford it monopsony power over the commodities used in 

brewing beer. 

54. 

 Experts have concluded that ABI’s new global scale, if the acquisition is permitted, will 

give it leverage over the commodities used in brewing beer and many other facets of the beer 

industry that will likely affect competition in the United States. The proposed acquisition would 

increase ABI’s buying power by potentially controlling over 30 percent of total worldwide beer 

production. A combined ABI-SAB would have 58 percent of the global beer profit pool which far 

outweighs Heineken’s 11 percent, it next closest competitor. Antitrust enforcement agencies look 

to post-merger buyer power because abusive buyer power can harm not only input sellers, but also 

other buyers. 

55. 

 The beer industry, and especially small buyers like craft brewers, is particularly vulnerable 

to what is known as the “waterbed effect” due to capacity issues involved in the brewing and 

packaging of beer. The waterbed effect occurs when a powerful buyer demands lower prices or 

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other concessions from its suppliers, causing the supplier to, in turn, increase prices to smaller 

buyers or offer them otherwise worse terms. 

56. 

 Hops are an essential ingredient in beer. Hops shortages occur frequently. Hops can only 

be grown in a limited geographic area and requires a lot of water to grow. Hop growing also has 

high startup costs and high quality hop plants can take years before they hit full production. These 

factors lead to frequent hops shortages that disproportionately impact craft brewers. Hops come in 

many varieties that can be roughly divided into two categories: bitter hops used in traditional 

lagers and aroma hops used predominantly by craft brewers to make more flavorful beers. ABI is a 

powerful buyer in the bitter hops market, which is highly commoditized, but does not yet have 

much market power in the aroma hops market. The deal could depress prices in the bitter hops 

market due to ABI’s buyer power and other purchasers who put pressure on their suppliers to 

compete with ABI’s lower costs. This may cause U.S. farmers to abandon the bitter hops market in 

favor of more profitable aroma hops, further decreasing the ability of other buyers to compete on 

lager style beers. 

57. 

 Moreover, in the packaging of beer, large can-maker Crown Holdings, Inc. (formerly a 

partner with Constellation in the joint venture that distributed Modelo’s products in the U.S. before 

ABI acquired Modelo), has recently reportedly dropped both new and existing small craft 

customers and lengthened lead times, suggesting capacities are becoming limited in the industry. 

The shortages of hops and can packaging disproportionately impact craft brewers. 

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58. 

 ABI’s increased buyer power means that it will more likely get the inputs it wants, in the 

quantities it wants, and at the terms it wants. This is likely to disadvantage input providers, as ABI 

is notorious for demanding extremely favorable terms like 120-day payment terms. ABI’s 

increased monopoly power is also likely to mean worse terms for every other buyer in the market, 

not just because suppliers are likely to raise prices to recover lost profits, but because of capacity 

limitations as well. Smaller buyers are likely to experience delays, poorer terms, and even 

unavailability. ABI would also be likely to exert its buyer power strategically to disadvantage 

rivals in this way. 

NATURE OF TRADE AND COMMERCE 

59. 

 Beer comprises a wide variety of brands and alcoholic beverages usually made from a 

malted cereal grain, flavored with hops, and brewed via a process of fermentation. Beer is 

substantially differentiated from other alcoholic beverages by taste, quality, alcohol content, 

image, and price. 

60. 

 In addition to brewing, beer producers typically sell, market and develop different brands. 

Marketing and brand building take various forms including sports sponsorships, print advertising, 

national television advertising campaigns and, increasingly, online marketing. 

61. 

 Most brewers use distributors to merchandise, sell, and deliver beer to retailers. Those end 

accounts are primarily grocery stores, large retailers such as Target and Wal-Mart, and 

convenience stores, liquor stores, restaurants, and bars which, in turn, sell beer to the consumer. 

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Beer brewed in foreign countries may be sold to an importer, which then arranges for distribution 

to retailers. 

62. 

 ABI groups beer into four segments: sub-premium, premium, premium plus, and high-end. 

The sub-premium segment, also referred to as the value segment, generally consists of lager beers, 

such as Natural and Keystone branded beer, and some ales and malt liquors, which are priced 

lower than premium beers, made from less expensive ingredients, and are generally perceived as 

being of lower quality than premium beers. The premium segment generally consists of 

medium-priced American lager beers, such as ABI’s Budweiser, and SAB’s Miller and Coors 

brand families, including the “light” varieties. The premium plus segment consists largely of 

American beers that are priced somewhat higher than premium beers, made from more expensive 

ingredients and are generally perceived to be of superior quality. Examples of beers in the 

premium plus category include Bud Light Lime, Bud Light Platinum, Bud Light Lime-a-Rita, and 

Michelob Ultra. 

63. 

 The high-end category includes craft beers, which are often produced in small-scale 

breweries, and imported beers. High-end beers sell at a wide variety of price points, most of which 

are higher than premium and premium plus beers. The high-end segment includes craft beers such 

as Dogfish Head, Flying Dog, and also imported beers, the best selling of which is ABI-owned 

Modelo’s Corona. ABI also owns high-end beers including Stella Artois and Goose Island. 

Brewers with a broad portfolio of brands, like ABI, typically seek to maintain “price gaps” 

between each segment. For example, premium beer is priced above the sub-premium beer, but 

below premium plus beer. 

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64. 

 Beers compete with one another across segments and ABI and SAB brands are in regular 

competition with one another. 

65. 

 The relevant product market is the production and sale of beer. 

66. 

 The relevant geographic market is the United States. There is competition between brewers 

on a national level that affects local markets throughout the United States. Decisions about beer 

brewing, marketing, and brand building typically take place on a national level. In addition, most 

beer advertising is on national television, and brewers commonly compete for national retail 

accounts. General pricing strategy also typically originates at a national level. A hypothetical 

monopolist of beer sold in the United States would likely increase its prices by at least a small but 

significant and non-transitory amount. Accordingly, the United States is a relevant geographic 

market under Section 7 of the Clayton Act. 

67. 

 Within the relevant market, the following well-defined submarkets may exist, which in 

themselves constitute relevant markets for antitrust purposes: Oklahoma City, Oklahoma; Salt 

Lake City, Utah; Tampa/St. Petersburg, Florida; Houston, Texas; Jacksonville, Florida; 

Minneapolis/St. Paul, Minnesota; Denver, Colorado; Birmingham/Montgomery, Alabama; 

Memphis, Tennessee; Las Vegas, Nevada; Dallas/Fort Worth, Texas; Orlando, Florida; Los 

Angeles, California; Phoenix/Tucson, Arizona; Raleigh/Greensboro, North Carolina; 

Portland/Medford, Oregon, Miami/Fort Lauderdale, Florida; Hartford, Connecticut/Springfield, 

Massachusetts; Richmond/Norfolk, Virginia; Chicago, Illinois; New York, New York; Atlanta, 

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Georgia; Sacramento, California; Boston, Massachusetts; San Diego, California; Baltimore, 

Maryland/Washington, DC; San Francisco/Oakland, California. 

68. 

 The United States is the world’s most profitable beer market. 

69. 

 The number of major brewers operating plants in the United States has decreased for 

decades, resulting in a highly concentrated market. 

70. 

 The relevant markets are highly concentrated and would become significantly more 

concentrated as a result of the proposed acquisition. 

71. 

 ABI is the largest brewer of beer sold in the United States and SAB is the second largest. 

The remaining sales of beer in the United States are divided among Heineken and fringe 

competitors, including many craft brewers, which defendants have characterized as fragmented, 

small players. 

72. 

 The beer industry in the United States is highly concentrated and would become 

substantially more so as a result of ABI’s acquisition of SAB. Market share estimates demonstrate 

that in 20 of the 26 local geographic submarkets identified above, the post-acquisition HHI will 

exceed 2,500 points. 

73. 

 ABI dominates the production and sale of beer in the United States. 

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74. 

 ABI has 46 percent of the beer market in the United States. 

75. 

 SAB has 25 percent of the beer market in the United States. 

76. 

 Heineken, the third largest brewer of beer in the world, has 4 percent of the beer market in 

the United States.

77. 

 None of the remaining brewers have as much market share in the United States as does 

Heineken. 

78. 

 In the United States, ABI, post-acquisition, will have a combined market share of 

approximately 71 percent. The post-transaction HHI of the United States beer market has been 

estimated to increase by reason of the acquisition by nearly 3,000 points. 

79. 

 The market concentration measures, coupled with the significant increases in 

concentration, described above, demonstrate that the acquisition of SAB by ABI is presumptively 

anticompetitive. 

80. 

 Price is the most important consideration in the sale of beer. Indeed, ABI and SAB consider 

beer to be a commodity and that the only competition between them is with regard to advertising. 

81. 

 Shelf space in major retail chains and other retail outlets is an important component in the 

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sale of beer. The person in charge is usually referred to as the “Category Captain” who determines 

which beer will be placed on which part of a store’s shelves. These Category Captains are induced, 

coerced, and given gratuities in order to give ABI and SAB the best possible position on retail 

shelves. As the American Antitrust Institute has reported to the Department of Justice, an ABI 

acquisition of SAB will result in diminished visibility of competitors’ products on retail shelves: 

Under the practice of “category management,” many retailers have 

outsourced the management of their beer aisles to “category captains.” In their 

designated product line, category captains, who are typically the leading 

manufacturer in the segment, select the particular brands to carry and also design 

the configuration of retail shelves. While this system can improve the retailer’s 

sales and profitability, it is also ripe for anticompetitive abuse. A category captain 

can give greater shelf prominence to its own products and opt not to stock rival 

products. This type of opportunism frustrates competition on the merits and can 

doom lesser-known brands to failure. 

If ABI acquires Miller, it would have more power at the retail level to 

marginalize rivals. In beer, ABI is the leading category captain and, together with 

Miller, accounts for the overwhelming majority of category captaincies. From the 

perspective of retailer profitability, evidence suggests that ABI and Miller category 

captains, in some parts of the country, are devoting too much space to their own 

brands and too little to craft beers. Following an acquisition of Miller, ABI would 

control a greater number of beer aisles and have more power to manipulate retail 

shelves to promote its own brands and hurt rivals.

82. 

 ABI and SAB have typically announced annual price increases in late summer for 

execution in early fall. The increases vary by region, but typically cover a broad range of beer 

brands. In most local markets, ABI is the market share leader and issues its price announcement 

first, purposely making its price increases transparent to the market so its competitors will fall into 

line. In the past several years, SAB has followed ABI’s price increases to a significant degree. 

83. 

 The specifics of ABI’s pricing strategy are governed by its “Conduct Plan,” a strategic plan 

for pricing in the United States that reads like a how-to manual for successful price coordination. 

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The goals of the Conduct Plan include: “yielding the highest level of followership in the 

short-term” and “improving competitor conduct over the long-term.” 

84. 

 ABI’s Conduct Plan emphasizes the importance of being “Transparent—so competitors 

can clearly see the plan.” According to ABI, its Conduct Plan “increases the probability of [ABI] 

sustaining a price increase.” ABI has implemented a “conduct plan,” which, according to the 

Department of Justice, is intended by ABI to establish “the highest level of [price] followership” 

by its large rivals by being as “consistent,” “simple” and “transparent” as possible. ABI believes 

that its Conduct Plan provides the highest possibility of “sustaining a price increase” and “ensuring 

competition does not believe they can take share through pricing.” 

85. 

 In the past several years, ABI’s pricing strategy has led to many price increases in which 

SAB has joined. 

86. 

 By contrast, in or around 2008, before ABI acquired all of Modelo, Modelo’s U.S. 

distributor implemented its so-called “Momentum Plan” with Modelo's enthusiastic support. The 

Momentum Plan was specifically designed to grow Modelo’s market share by shrinking the price 

gaps between brands owned by Modelo and U.S. domestic premium brands. By maintaining 

steady prices while the prices of premium beer continued to rise, Modelo narrowed the price gap 

between its beers and ABI’s premium beers, encouraging consumers to trade up to Modelo’s 

superior brands. The narrowed price gaps frustrated ABI and SAB because they resulted in 

Modelo gaining market share at their expense. With ABI’s acquisition of Modelo, the Momentum 

Plan was eliminated, with the result that Modelo’s prices increased in the fall of 2015. 

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87. 

In a move that was unprecedented before ABI’s acquisition of Modelo, Constellation was 

the first brewer in 2015 to report a price hike. For its Modelo brands, such as Corona and Modelo 

Especial, Constellation announced it would raise prices by three percent in some states this fall, 

according to Beer Marketer’s Insights. In California and Florida, prices will rise by about 75 cents. 

California alone accounts for about 25 percent of Constellation’s total sales volume. These price 

increases would likely not have occurred had ABI not acquired 100 percent of Modelo and then 

outsourced distribution in the U.S. market to Constellation Brands which shared its desire to 

discontinue the Momentum Plan and raise Modelo brands’ prices. 

88. 

 ABI is now free of the downward pressure on prices Modelo exerted before its acquisition 

by ABI. If ABI is permitted to acquire SAB, the trend toward higher prices in the U.S. beer market 

will accelerate as ABI realizes its vision of leading industry prices upward, with SAB’s 

MillerCoors’ – post-acquisition, Molson Coors’ – beers and others’ following suit. 

89. 

 The proposed acquisition will increase the ability of ABI and the remaining beer firms to 

coordinate by eliminating another competitor with the potential to thwart ABI’s price increase 

leadership. 

90. 

The acquisition by ABI of SAB will likely raise barriers to entry and expansion, 

diminishing non-price competition and reducing choice for beer drinkers. Without access to 

efficient distribution and retail shelves, craft and other rival brewers may face greater difficulties 

in reaching American consumers. 

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91. 

 ABI and SAB are substantial and significant competitors and potential competitors in the 

United States. 

92. 

 The production and sale of beer are in a continuous and uninterrupted flow of interstate 

commerce. Materials used in the production of beer are purchased and shipped in a continuous and 

uninterrupted flow of interstate commerce. 

93. 

 National brewers possess significant competitive advantages over smaller or regional 

brewers. They are able to advertise on a nationwide basis, have greater prestige, larger distribution 

networks, and are less affected by weather and labor issues. 

94. 

 Any restraint of trade in the beer sales market in the United States, including the restraints 

specifically alleged in this complaint, directly and substantially restrains and affects interstate 

commerce. 

95. 

 Any agreement short of prohibiting ABI’s acquisition of SAB will result in across the 

board price increases and restrictions in the craft brewers’ ability to market their more desirable 

products to consumers as ABI exerts its enhanced power on its own and others’ distributors/ 

wholesalers to obstruct the smaller brewers’ ability to get their products to market and placed in 

retail beer outlets. 

/ / / 

/ / / 

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SECTION 7 OF THE CLAYTON ANTITRUST ACT, 15 U.S.C. § 18 

96. 

 As the foregoing paragraphs show, the effect of the acquisition, if consummated, may be 

substantially to lessen competition, or tend to create a monopoly in the production and sale of beer 

in the United States by eliminating SAB as an actual or potential competitor and giving to the new 

company monopoly power and the likelihood of collusion in the production, marketing, 

distribution and sale of beer products in the United States. 

97. 

 By reason of the proposed acquisition, consumer choice and consumer welfare will be 

eliminated. 

98. 

 By reason of the defendants’ proposed acquisition, plaintiffs are threatened with loss or 

damage in the form of higher beer prices and less consumer options. If defendants’ proposed 

transaction is consummated, plaintiffs will sustain irreparable harm for which damages will be 

unable to compensate plaintiffs, in that competition once lost cannot easily be restored. 

Accordingly, plaintiffs bring this action for both preliminary and permanent injunctive relief 

against ABI’s acquisition of SAB. 

VIOLATIONS ALLEGED 

Section 7 of the Clayton Antitrust Act, 15 U.S.C. § 18

99. 

 Plaintiffs incorporate and reallege paragraphs 1 through 98 above. 

100. 

 The conduct of ABI described hereinabove, specifically the agreement by ABI to purchase 

SAB, constitutes a violation of Section 7 of the Clayton Antitrust Act, 15 U.S.C. § 18, in that the 

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effect of the proposed acquisition may be substantially to lessen competition, or to tend to create a 

monopoly in the production and sale of beer in the United States. By reason of the violation 

plaintiffs are threatened with loss or damage in the form of higher beer prices and diminished 

competition, as well as irreparable harm for which damages will be inadequate to compensate 

plaintiffs, such that plaintiffs are entitled to bring suit under Section 16 of the Clayton Antitrust 

Act, 15 U.S.C. § 26, to obtain preliminary and permanent injunctive relief to prohibit ABI’s 

acquisition of SAB, and to recover their costs of suit, including a reasonable attorney’s fee. 

101. 

 Unless restrained and enjoined, ABI will consummate the acquisition of SAB to the 

immediate and irreparable damage of the plaintiffs and the consuming public. 

PRAYER FOR RELIEF

 WHEREFORE, plaintiffs demand the following relief from this Honorable Court: 

 A. Declaring, finding, adjudging, and decreeing that the agreement between 

ABI and SAB proposing that ABI acquire SAB violates Section 7 of the Clayton 

Antitrust Act, 15 U.S.C. § 18. 

B. Preliminarily enjoining ABI and those acting in concert with it from 

consummating the acquisition of SAB during the pendency of this action. 

C. Permanently enjoining ABI from consummating the acquisition of SAB. 

D. Awarding to plaintiffs their costs of suit, including a reasonable attorney’s 

fee, as provided by Section 16 of the Clayton Antitrust Act, 15 U.S.C. § 26. 

E. Granting to plaintiffs such other and further relief to which they may be 

/ / / 

/ / / 

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entitled and which the Court finds to be just and appropriate in order insure 

competition in the industry. 

 DATED this 1st day of December, 2015. 

 CAUBLE & CAUBLE, LLP 

 

 s/Christopher L. Cauble 

Christopher L. Cauble, OSB No. 962374 

ccauble@thecaublefirm.com 

 Rachele R. Selvig, OSB No. 095016 

rselvig@thecaublefirm.com 

 ALIOTO LAW FIRM

Joseph M. Alioto, SBN #42680, Pro hac vice pending

 josephalioto@mac.com 

 

 MESSINA LAW FIRM, P.C.

 Gil D. Messina, NJ #029661978, Pro hac vice pending 

 gmessina@messinalawfirm.com 

 961 Holmdel Road 

 Holmdel, NJ 07733 

 732-332-9300 Phone/732-332-9301 Fax 

 SEVERAID & GLAHN, P.C. 

Ronald H. Severaid, SBN #78923, Pro hac vice pending 

 rhseveraid@sbcglobal.net 

 Carter Glahn, SBN #242378, Pro hac vice pending 

 sandglaw-mail@yahoo.com 

 1787 Tribute Rd., Suite D 

 Sacramento, CA 95815 

 916-929-8383 Phone/916-925-4763 Fax 

 

 LAW OFFICES OF JEFFERY K. PERKINS 

 Jeffery K. Perkins, SBN #57996, Pro hac vice pending 

 jefferykperkins@aol.com 

 1550-G Tiburon Blvd., #344 

 Tiburon, CA 94920 

 415-302-1115 Phone/415-435-4053 

 Attorneys for Plaintiffs 

Case 1:15-cv-02250-CL Document 1 Filed 12/01/15 Page 31 of 32
Exhibit 1 

Page 1 

PLAINTIFFS 

James DeHoog 

Grants Pass, OR 

Brian Bouteller 

Grants Pass, OR 

Shonna Bouteller 

Grants Pass, OR 

Carly Bowen 

Grants Pass, OR 

Tom Butterbaugh 

Grants Pass, OR 

Erica I. Corona 

Medford, OR 

Maria G. Corona 

Grants Pass, OR 

Chris Dennett 

Medford, OR 

John DesBiens 

Williams, OR 

Matthew Johnson 

Medford, OR 

Cynthia A. Kreitzberg 

Puyallup, WA 

Edward Lawrence 

Tiberon, CA 

Jerusha Malaer 

Bend, OR 

Robert Malaer 

Bend, OR 

Michael Martin 

Northern CA 

Michael McAtee 

Arnold, CA 

David Milligan 

Central Point, OR 

Jeff Reeder 

Portland, OR 

Ralph Reeder 

Central Point, OR 

Wade Scaglione 

Grants Pass, OR 

Beth H. Silvers 

Grants Pass, OR 

Bradley O. Silvers 

Grants Pass, OR 

Patrice Wade 

Grants Pass, OR 

Case 1:15-cv-02250-CL Document 1 Filed 12/01/15 Page 32 of 32