Posted onJune 24, 2016
Future inhabitants of this bright, blue marble probably won’t have to worry about being in the Coke or Pepsi camp. Or the Miller or Bud camp. In fact, future hydration seekers might notever have to worry about what to pour down their space-chrome covered gobs at all.
No, we’re not suggesting our descendants will be guzzling that old Silicon Valley standby, Soylent. But an unprecedented corporate merger is raising concerns about its possible effects on the beverage industry as a whole. And it’s going down now.
The world’s two largest beer companies, SABMiller and Anheuser-Busch InBev, are proposing a merger, and the result is likely to be the beer equivalent to Conglomo. If Anheuser-Busch really does buy Miller, the combined brewery will have a $275 billion market cap. According toReuters, some analysts say that’s big enough to buy Coca-Cola or Pepsi.
Not only would that tear down the traditional divide between soft and alcoholic beverages in this country, it could—through lack of competition—drive beverage prices of all kinds sky-high. Competition in the market would be a thing of the past. Many Democrats in Congress are not pleased; talk of serious antitrust issues is swirling around the Capital.
“It concerns me very much, and it should be a concern to the American people who believe in a competitive economy that you do not have,” presidential candidate and Vermont Senator Bernie Sanders told The Hill.
Several other Congressmen agree, and hope the Department of Justice and other antitrust regulators will call off the deal.
Even if they don’t, the process to complete the two companies’ merger could end up taking months or even years. Beforehand, both companies would have to file governmental pre-merger notifications, which contain information about said businesses and the industry as whole. That sounds a little silly—considering they would pretty much be the entire industry. Both the Federal Trade Commission and the Department of Justice would have approximately 30 days to review the proposal. Tack on an additional 30 days in the event that either agency requests additional information, which it’s safe to say they would.
At that point, one of three situations would come to fruition: the proposed merger is accepted, a negotiation for a revised merger begins, or the merger is just straight-up challenged in federal court.
Screw “I’m Just a Bill.” Schoolhouse Rock! should make a goddamn song out of all that.
The deal will be reviewed not just by regulators in the US, but also by regulators around the world. That’s because the two companies currently control more than just 70 percent of the beer sold in the US—they also control a whopping 30 percent of the global market.
That amounts to a really, really big company—possibly one that could take over the cornerstone soda corporations of the American beverage business.
An industry banker told Reuters that although Coke’s market value of $171 billion is too big for Anheuser-Busch to buy now, the new conglomerate, with its quarter-of-a-trillion-dollar market cap, could see it as a viable target.
“Because companies are getting bigger with this potential acquisition, they’re allowed to dream even bigger,” an analyst at Sanford Bernstein said.