It’s confusing, but the federal government has examined the sales of Anheuser-Busch  products and A-B controlled products and decided that before the InBev takeover can be consummated, A-B must sell its Labatt USA subsidiary.

This is a bigger deal than it seems on the surface. Among other brands, Labatt USA brands include Rolling Rock, the beer purchased two years ago and now brewed at an A-B plant in Newark. Besides all the blah Canadian Labatt beers (Blue, Ice, etc.), Labatt USA also markets the original Lownbrau, Boddington’s Pub Ale and much of the InBev Belgian line including Stella Artois, Hoegaarden, Leffe and Belle-Vue. The company also imports and markets a number of Mexican beers including ecate, Dos Equis, Carta Blanca and Bohemia.

Wonder how this will work out?  Could a non-A-B company win the rights to market Stella and Hoegaarden in the U.S.  The mind boggles.

When InBev bought a major English beer company a couple of years ago, the British government required all sorts of sales, which is how Coors wound up with Bass.

Also, the feeble U.S. requirement totally ignores the effect on the rapidly shrinking U.S. distribution network.  There are many non-AB distributors handling InBev beers. Are they going to be protected or is all the InBev business going to move to A-B distributors?  But hey,  distributors are independent right? Right.

..Here’s the government release:

WASHINGTON — The Department of Justice announced today that it will require InBev N.V./S.A. to divest subsidiary Labatt USA, along with a license to brew, market, promote and sell Labatt brand beer for consumption in the United States, in order to proceed with InBev’s $52 billion acquisition of Anheuser-Busch Companies Inc.  The Department said that the transaction, as originally proposed, would likely have led to higher prices for beer in the Buffalo, Rochester and Syracuse, N.Y., metropolitan areas.

The Department’s Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., to block the proposed transaction.  At the same time, the Department filed a proposed settlement that, if approved by the court, would resolve the lawsuit and the Department’s competitive concerns.

According to the complaint, Anheuser-Busch’s Budweiser brands, including Budweiser and Bud Light, and InBev’s Labatt brands, including Labatt Blue and Labatt Blue Light, are the two biggest selling beer brand families in Buffalo, Rochester and Syracuse.  The original transaction would have eliminated competition between Labatt USA and Anheuser-Busch and resulted in higher prices to beer drinkers in those metropolitan areas.

Under the terms of the proposed settlement, InBev must sell Labatt USA and grant a license to the acquirer to brew and sell Labatt brand beer for consumption throughout the United States.  The Department’s Antitrust Division must approve the purchaser of Labatt USA to ensure that the sale will restore the competition for beer sales in Buffalo, Rochester and Syracuse that existed before InBev purchased Anheuser-Busch.

“This divestiture will ensure that consumers will continue to benefit from the significant competition between the merging companies in upstate New York,” said Deborah A. Garza, Deputy Assistant Attorney General of the Antitrust Division.

In the large majority of markets in the United States, InBev accounts for less than two percent of beer sales and engages in very little competition with Anheuser-Busch.  In contrast, sales of InBev’s Labatt beer brands in Buffalo, Rochester and Syracuse account for a significant portion of beer sales.  The Department concluded that in those markets, the elimination of the competition between InBev and Anheuser-Busch would have resulted in higher prices for consumers.  The proposed settlement will allow the purchaser of Labatt USA to sell the Labatt brands throughout the United States.

Anheuser-Busch, a Delaware corporation headquartered in St. Louis, is the largest brewer in the United States and accounts for approximately 50 percent of beer sales nationwide.  Anheuser-Busch operates 12 breweries in the United States and the company’s 2007 revenue was approximately $16.6 billion.

Belgium-based InBev is the second-largest brewer in the world.  InBev’s best-selling brands in the United States are Stella Artois, Becks, Bass and Labatt Blue.  InBev’s total 2007 sales were approximately 14.4 billion euro. The Labatt brands are brewed in Canada by InBev’s subsidiary, Labatt Brewing Company Limited, and are imported and sold in the United States by Labatt USA.  Approximately half of the sales of Labatt brand beer in the United States are to customers in the Buffalo, Rochester and Syracuse metropolitan areas.