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The Department of Justice thinks so. It filed suit today (Jan. 31, 2013) to prevent consummation of the planned merger, which was announced June 29, 2012.

The D.O.J. argues that Anheuser-Busch’s acquisition of the remaining 50% share of Modelo that it does not currently own would “substantially lessen competition” and would have “anticompetitive effects” in violation of the Clayton Act § 7, 15 U.S.C. § 18.

At first glance, the D.O.J.’s stance appears to be an aggressive reading of the Clayton Act. According to the D.O.J.’s complaint, Anheuser-Busch currently holds 39% of the market of U.S. beer sales and Modelo holds 7% of the same market. In comparison, MillerCoors holds 26% of the market and the rest of the market players share the remaining 28%. After the planned merger, Anheuser-Busch would hold 46% of the market. Moreover, in acquiring Modelo, Anheuser-Busch is not acquiring a lower-priced competitor.

The D.O.J.’s first challenge will be defining the relevant geographic market. Its complaint argues that 26 local markets where Modelo and Anheuser-Busch currently compete “head to head” should be the relevant markets for antitrust analysis. If the court finds instead that the relevant geographic market is the entire U.S., it may be harder for the D.O.J. to show an anticipated anticompetitive effect if the merger is consummated.

The D.O.J.’s second challenge is its novel argument concerning price competition. The complaint argues that Modelo exerts price competition on Anheuser-Busch by failing to match Anheuser-Busch’s price increases, increasing its prices at a slower pace and thus encouraging consumers to “trade up to Modelo brands.” The complaint alleges that by “[o]wning the Modelo brands “ Anheuser-Busch can “slow the volume trend of High End Segment.” But this credits Modelo’s 7% market share with a great deal of power.

The main target of the D.O.J.’s ire appears to be Anheuser-Busch’s apparent ability to control beer pricing through transparent pricing and lockstep following by MillerCoors. But even if the D.O.J. is successful at blocking the merger with Modelo, the lockstep price increases are likely to continue.

Further, the complaint refers to Modelo as “a particularly aggressive competitor” and downplays the fact that Anheuser-Busch already owns 50% of the company.

This case is starkly different from the action that the D.O.J. brought to prevent the merger of AT&T and T-Mobile, which seemed obvious by comparison. I’ll be following this one to see how it unfolds.