Justice Dept. makes cheap beer a top priority
Thank goodness Big Brother is there to protect us from evil monopolies.
In 1997, the Federal Trade Commission blocked the merger of Office Depot (ODP) and Staples (SPLS), a move that was rather shocking and somewhat comical to me at the time. Thank goodness Big Brother stepped in to stop the formation of this evil monopoly, which, if had been allowed to move forward, surely would have driven the prices of office supplies through the roof, giving the public no recourse.
At the time, the director of the FTC's Bureau of Competition, William J. Baer said this: "The FTC's decision to ask a court to block the merger is about lower prices for consumers. If the merger is allowed to proceed, consumers will pay millions of dollars more for their copy paper, envelopes, pens and file folders."
You can't make this stuff up; that is a quote taken directly from the FTC Web site. Sounds more like it came from a "Saturday Night Live" skit.
Big Brother is at it again, this time attempting to protect us from a beer monopoly, as the Justice Department filed an anti-trust lawsuit Thursday seeking to prevent Anheuser-Busch InBev (BUD) from acquiring the 50% of Grupo Modelo (GPMCY), maker of Corona, that it does not already own.
Evidently, if allowed to proceed, Anheuser-Busch will corner the U.S. beer market, and charge whatever it wants to, which would be severely damaging to US consumers. After all, beer is one of the things, besides air, food and water needed to sustain life.
Said William J. Baer, head of the Justice Department's Antitrust Division: "This is the sort of product that matters to consumers. If you have a very slight price increase that happens because of this deal, it could mean that consumers will pay billions of dollars more."
In case you are wondering, that is indeed the same William J. Baer that saved us from paying through the nose for pencils by blocking the Office Depot and Staples merger back in 1997. Haven't they got better things to do with our money?
Our economy continues to struggle mightily, unemployment and underemployment are still at alarming levels, the national debt continues to explode, yet at least we'll still have cheap beer. Is that just a ploy to promote drinking in order to further dull our senses and take our attention off the real problems we face as a nation? Or, are they out of things to do at the Justice Department?
Again, this is another clear indicator of the lack of understanding about economics by many in Washington. Suppose the merger went through after all, and AB InBev increased beer prices 20%, not because of rising input prices, but rather because they think they can get away with it. Consumers still have choices in the beer market. They can still switch brands, give up drinking beer, or perhaps even make their own.
This is not life or death; but perhaps reflective of a Justice Department that's had its share of controversy over the past few years and is trying to remain relevant.
- Also see: TheStreet test kitchen: cheap pizza
There was indeed fallout from Thursday's filing: AB Inbev fell nearly 6%, while Mexico's Grupo Modelo fell 6.5%. There was also some collateral damage, as Constellation Brands (STZ) fell 17%, the result of fear that the Department of Justice suit could hurt Constellation's efforts to acquire Modelo's stake in Crown Imports LLC, which is the U.S. importer for Corona.
Meanwhile, Boston Beer (SAM), a great success story, and one of the only survivors from the publicly traded micro brewery craze of the 1990's, had a relatively quiet day. Boston Beer is a testament to the fact that the small guy can still make it in the beer industry.
At the time of publication, the author held no positions in any of the stocks mentioned.
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Thanks Jonathan, we know whose side you are on.
(Hint: it's not consumers, it's not competition, and it's not a fair market.)
These types of arguments that try to diminish an action just because there are other bigger problems to solve are trite. Sure, the economy is bad and there are more important things than the price of beer. But that doesn't mean we can't also address smaller issues at the same time as we work on bigger issues. The FTC has more than one employee, and those employees do not all have to be working on the exact same thing at the same time.
The author also makes a similar asinine argument of trying to reduce the importance of this action by comparing beer to life necessities such as air, food, and water. Of course beer is not a requirement of life, but according to this author's viewpoint the FTC should only pursue activities that directly impact life sustaining activities such as air, food, and water.
I submit that if you take your head out of your presumably prodigious bottom, you would realize that billions of dollars in product sales means it is an industry that the DOJ should focus on. If it is a small industry, the DOJ should not because it does not affect a lot of Americans.
Beer probably affects more consumers than most other products in our economy. Way to demonstrate your utter lack of critical thinking skills.
Further, when these businesses are international, they use the US military to enforce their international trade deals yet they don't pay US taxes for their overseas profits.
Break up the banks, break up the energy companies, break up ALL the big companies= more jobs and less concentrated power (which contributes to nothing but corruption).
Hey Heller go pull what ever you got up ur rear out and go have a beer.
I like beer
It makes me a jolly good fellow
I like beer
It helps me unwinde and sometimes it makes me feel mellow (makes him feel mellow)
Whiskys too rough
Champaign costs too much
And vodka sets my mouth in gear
This little refrain will help me explain
As a matter of fact I like beer!
-Tom T. Hall
Thanks Big Brother!!!!!
The DOJ needs to get their head out !
And legalize weed that's safer than BOOZE !
Smoke a BUD instead !
Who cares.......do I have a job that will pay my bills? I'm I working more than 40 hours a week? Can I get heath insurance that I can afford? Really, office supplies and beer??
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