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DeHoog v. Anheuser-Busch InBev SA/NV

United States Court of Appeals, Ninth Circuit

August 8, 2018

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; Patrice Wade, Plaintiffs-Appellants,
v.
Anheuser-Busch InBev SA/NV; Sabmiller, PLC, Defendants-Appellees.

          Argued and Submitted May 15, 2018 Portland, Oregon

          Appeal from the United States District Court for the District of Oregon Ann L. Aiken, District Judge, Presiding D.C. No. 1:15-cv-02250-CL

          Joseph M. Alioto (argued) and Jamie L. Miller, Alioto Law Firm, San Francisco, California; Rachele R. Selvig and Christopher L. Cauble, Cauble and Cauble LLP, Grants Pass, Oregon; Gil D. Messina, Messina Law Firm P.C., Holmdel, New Jersey; Jeffery K. Perkins, Law Offices of Jeffery K. Perkins, Tiburon, California; for Plaintiffs-Appellants.

          Yonatan Even (argued), Cravath Swaine & Moore LLP, New York, New York, for Defendants-Appellees.

          Before: M. Margaret McKeown and Richard A. Paez, Circuit Judges, and Cynthia A. Bashant, [*] District Judge.

         SUMMARY[**]

         Antitrust

         The panel affirmed the dismissal of an action brought under § 7 of the Clayton Act by consumers and purchasers of beer, seeking to enjoin Anheuser-Busch InBev, SA/NV, from acquiring SABMiller, plc.

         As a condition of approving the transaction, the U.S. Department of Justice required SABMiller to divest entirely its domestic beer business. Because the divestiture left SABMiller without a presence in the U.S. beer market, the consumers did not and could not plausibly allege that ABI's acquisition of SABMiller would substantially lessen competition in that market. The panel held that the consumers therefore failed to state a claim under the Clayton Act.

          OPINION

          McKEOWN, Circuit Judge

         This case features a bevy of beer aficionados trying to undo the acquisition of one brewing behemoth by another. James DeHoog and other consumers and purchasers of beer ("Consumers") appeal the district court's dismissal of their private antitrust action to enjoin Anheuser-Busch InBev, SA/NV ("ABI") from acquiring SABMiller, plc ("SAB"). Although the merger closed in October 2016 with the blessing of antitrust authorities, Consumers' private suit persists.

         Like the district court, we conclude that Consumers failed to state a claim under Section 7 of the Clayton Act, 15 U.S.C. § 18. As a condition of approving the transaction, the U.S. Department of Justice ("DOJ") required SAB to divest entirely its domestic beer business. Because the divestiture left SAB without a presence in the U.S. beer market, Consumers did not and could not plausibly allege that ABI's acquisition of SAB would substantially lessen competition in that market.

         Background

         ABI, whose brands include Budweiser, Stella Artois, and Michelob Ultra, is the largest producer and seller of beer in the United States, comprising roughly 46 percent of the U.S. market share. At the time of this suit, SAB was a multinational brewing company that operated in the United States exclusively through a joint venture with Molson Coors Brewing Company ("Molson").[1] The SAB/Molson joint venture, MillerCoors, LLC ("MillerCoors"), was the second-largest producer and seller of beer in the United States, controlling roughly 25 percent of the U.S. market share.[2]

         In November 2015, ABI and SAB announced the terms of a $107 billion acquisition of SAB by ABI. As part of the transaction, ABI also announced a contingent agreement with Molson: upon completion of ABI's acquisition of SAB, SAB would completely divest its interest in MillerCoors. Per the terms of the agreement, Molson would acquire SAB's 50 percent voting interest and 58 percent economic interest in MillerCoors, making MillerCoors a wholly-owned subsidiary of Molson. Molson would maintain full control of the business operations and resulting economic benefits of MillerCoors. In short, ABI would acquire SAB but not before spinning off SAB's ownership in MillerCoors (i.e., SAB's U.S. interests) to Molson.

         After reviewing the proposed transaction for its effect on competition, on July 20, 2016, the DOJ reached a settlement with ABI to allow the acquisition to move forward. ABI was required to divest SAB's entire U.S. business-including SAB's ownership in MillerCoors-such that the settlement would "prevent any increase in the concentration in the U.S. beer industry." The settlement also prohibited ABI from acquiring beer distributors or brewers without allowing for DOJ review of the acquisition's likely competitive effects and prevented ABI from engaging in certain ...


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