(WASHINGTON) – In a letter to U.S. Attorney General Loretta Lynch last week, Teamsters General President Jim Hoffa urged the Justice Department to reject any remedy to the pending mega-merger in the beer industry that does not address the competitive effects arising from MillerCoors’ decision to close its highly efficient brewery in Eden, North Carolina.
The proposed acquisition by Anheuser Busch-InBev (NYSE: ABI) of its largest competitor SABMiller (LON: SAB) is currently under review by the Department of Justice Antitrust Division, along with the related sale of SAB’s stake in the MillerCoors joint venture to Molson Coors (NYSE: TAP).
“The companies involved, no doubt, would like to see the investigation wrapped up in short order so they can complete their mega-merger,” Hoffa said. “Their desire to expedite cannot take precedence over the need to ‘get it right’ for consumers and working families.”
The Eden brewery is responsible for 12.5 percent of MillerCoors’ production capacity and 4 percent of all beer production in the United States.
“If this closure is permitted to move forward, it will not only affect good American jobs—roughly 500 at the brewery alone—but also negatively impact competition in the industry. The impact on consumers, we believe, will become apparent within months after the transactions take place and is likely to persist for years,” Hoffa said. “Reductions in industry capacity of this magnitude translate directly into higher prices for consumers, particularly in an industry that the Antitrust Division itself characterized in 2013 as not behaving competitively.”
Furthermore, Hoffa suggests, closing Eden is likely to introduce significant inefficiencies and drive down barrelage output in the remaining MillerCoors breweries.
“Particularly damning is evidence, available to the Division, showing that the company decided to close and not sell the brewery because it did not want the facility to end up in the hands of a competitor,” Hoffa said.
A recent lawsuit filed by Pabst against MillerCoors reinforces Teamster concerns of how the closure will directly impact competition. Pabst, whose products are produced by MillerCoors on a contract basis primarily at the Eden facility, alleged that within weeks of announcing the Eden closure, MillerCoors informed Pabst it would no longer have “sufficient capacity” to produce its products beyond the current contract. According to the lawsuit, MillerCoors then demanded three times the price to continue brewing its products.
The Teamsters have urged that the Eden brewery be divested to a buyer who will keep the brewery operating in the relevant market.
“On behalf of the International Brotherhood of Teamsters, I urge the Department to take the time necessary to address the anticompetitive effects created by the Eden brewery closure in order to protect the interests of workers and consumers,” the letter concludes.
The International Brotherhood of Teamsters represents 1.4 million hardworking men and women in the U.S., Canada and Puerto Rico, including some 15,000 members working throughout the brewery industry. Visit www.teamster.org for more information. Follow us on Twitter @Teamsters and on Facebook at www.facebook.com/teamsters.