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Pabst and Pearl file anti-trust suit over Miller-Molson link-up.

Pabst Brewing Corp. and another small brewer have filed an antitrust suit seeking to block Miller Brewing Co.'s proposed $273 million linkup with Molson Breweries of Canada. The suit seeks a temporary restraining order and permanent injunction against the Miller-Molson deal.

Pabst and it sister company, Pearl Brewing Co., said the Miller investment, which would give it 20 percent of Molson and 100 percent of its U.S. distribution arm, would continue a trend toward monopolization of the beer market by a few giant companies.

The two smaller brewers say that because Molson USA, the distribution arm, also handles their products, as well as Miller, they fear favoritism toward Miller brands.

The lawsuit also claims that Miller's $250 million annual advertising budget allows it to avoid price competition with the smaller independent brewers like Pabst.

In addition, the suit charges that Miller's ownership of Molson will restrict Pabst sales in Canada.

And since Philip Morris, Miller's parent company, recently purchased 8 percent of Mexican brewer Fomento Economic Mexicano SA, sales of Pabst and Pearl will be hampered south of the border as well, the suit alleges.

The Miller deal targets small brewers for extinction, said an attorney representing Pabst and Pearl.

"The result will be that consumers will pay higher prices and receive less variety and quality, jobs will be lost and plants shut down," he said. Miller counters that the proposed deal does not violate federal antitrust laws and said it hopes to close the purchase by April 2.

The Miller-Molson deal is considered a done deal, since it has already been approved by the U.S. Justice department.

A Molson executive called the charge by Pabst and Pearl a "nuisance suit."

Commenting on charges that a Miller-Molson merger would lead to a monopolization of the U.S. beer market, industry analysts note that Molson's share of the market is only .8 percent.

Even if Miller helps raise Molson's U.S. presence to 3 to 5 percent over the five years as anticipated, industry analysts say there is little serious threat to U.S. brewers.

Ironically, the precedent for blocking a merger in the beer industry was set in 1960, when the U.S. Supreme court blocked Pabst from taking over the rival Blatz brewery.
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Title Annotation:Pabst Brewing Co.; Pearl Brewing Co.; Miller Brewing Co.; Molson Breweries of Canada Ltd.
Publication:Modern Brewery Age
Date:Mar 29, 1993
Previous Article:Granville and Brick brewers sign marketing, production agreement.
Next Article:U.S. brewers look to global market: Anheuser-Busch plans to buy stake in Modelo.

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