America’s Oldest Indie Brewery Stands Up to Mega Beer Merger

Just days before the deal for the world’s largest beer merger is set to close, America’s oldest independent brewery is raising questions about the United States Justice Department’s proposed antitrust settlement. The Morning Call reports that Pottsville, Pennsylvania-based brewery D.G. Yuengling & Son submitted a letter to the department suggesting the agreement doesn’t go far enough in protecting small brewers’ access to distribution channels.

"Yuengling considers recent events and the proposed merger as one of the biggest threats to its existence, short of a second round of Prohibition," the company writes.

Yuengling is the fourth-largest brewery in the country, based on sales by volume, according to the Brewers Association. Though, the letter states the company controls only 1 percent of the U.S. market share. Company attorney Ted Zeller argues the agreement doesn’t fully take into consideration the fact that Anheuser-Busch InBev owns and controls many of its distributors as franchisees. This, according to Yuengling, would put AB InBev at an advantage over its competitors.

Yuengling further alleges that AB InBev has attempted to block its expansion into new markets because the indie brewer’s lager resembles AB InBev products, such as Budweiser. The mega-merger might also make it challenging for the Pennsylvania company to compete with similar AB InBev-SABMiller brews.

According to The Wall Street Journal, the current agreement prohibits AB InBev from rewarding its 500-plus distributors for focusing on company products and forcing them to share sales information from other brands. Distributors must also provide the same sales incentives to all beer brands without preference to AB InBev. It’s not clear what types of additional constraints Yuengling would like to see imposed on the merger. Eater has reached out to the brewery for comment.

While the Justice Department’s agreement is still awaiting final court approval, many other governments around the world have already signed off on the deal. The merger, which may result in more than 5,000 lost jobs, is expected to be finalized by October 10.

• Beer Wars: Yuengling Fights Massive Merger of Budweiser and Miller Lite Brewers [MC]

• Justice Department Clears AB InBev's Takeover of SABMiller [WSJ]

• AB InBev Sets Timeline to Complete World's Biggest Beer Merger [E]

• Tracking the Biggest Beer Merger in History [E]

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