899 F.3d 758
9th Cir.2018Background
- ABI (Anheuser-Busch InBev) agreed to acquire SABMiller (SAB) in a $107 billion transaction announced in 2015; ABI is the largest U.S. brewer (~46% market share).
- SAB operated in the U.S. only through the MillerCoors joint venture with Molson Coors, which held the MillerCoors brands and ~25% U.S. share.
- The DOJ conditioned approval of the ABI–SAB deal on SAB’s full divestiture of its U.S. business (its MillerCoors stake) to Molson; the merger closed in October 2016 after that divestiture.
- Consumers (23 U.S. beer purchasers) sued in Oregon under Section 7 of the Clayton Act seeking to enjoin the acquisition, alleging elimination of a competitor, higher prices, reduced choices, and increased ABI buying power.
- The district court dismissed the complaint with prejudice for failure to state a Section 7 claim; the Ninth Circuit affirmed, holding that ABI did not acquire any U.S. beer interests and Consumers’ allegations were speculative.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ABI’s acquisition violated Section 7 by eliminating an actual U.S. competitor | DeHoog: acquisition would eliminate SAB as a competitor in U.S. beer market, raising concentration and prices | ABI/DOJ: SAB had no independent U.S. presence—its U.S. presence was MillerCoors, which was divested to Molson, so ABI acquired no U.S. competitor | Dismissed: ABI acquired no U.S. interests; MillerCoors (now Molson-owned) remains a competitor, so no plausible prima facie Section 7 claim |
| Whether acquisition eliminated a potential competitor at the market edge | DeHoog: SAB was a potential entrant whose removal would harm competition | ABI: SAB was already in market via MillerCoors (not a potential entrant); allegations insufficient and contradicted by complaint | Dismissed: Plaintiffs failed to plead SAB as a potential competitor positioned to enter; theory implausible here |
| Whether post-divestiture conduct by Molson-operated MillerCoors could be alleged plausibly | DeHoog: Molson might adopt ABI-like distribution practices, harming competition | ABI: Such allegations are speculative and unsupported | Dismissed: Claims about future Molson/MillerCoors conduct are speculative and insufficient under Twombly/Iqbal |
| Whether dismissal with prejudice was an abuse of discretion | DeHoog: would amend complaint with additional factual allegations (e.g., joint-venture management role, brewery closing) | ABI: Proposed amendments are futile because remediable legal defect (no U.S. acquisition) remains | Affirmed: District court did not abuse discretion; amendments would be futile given divestiture |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for complaints)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must plead facts raising claim above speculation)
- Saint Alphonsus Med. Ctr.-Nampa Inc. v. St. Luke’s Health Sys., Ltd., 778 F.3d 775 (9th Cir. 2015) (prima facie burden in merger §7 suits)
- FTC v. Warner Commc’ns Inc., 742 F.2d 1156 (9th Cir. 1984) (standards for proving appreciable danger of anticompetitive effects)
- United States v. Falstaff Brewing Corp., 410 U.S. 526 (1973) (discussing potential-competitor doctrine)
- United States v. Penn-Olin Chem. Co., 378 U.S. 158 (1964) (potential entrant doctrine)
- United States v. El Paso Nat. Gas Co., 376 U.S. 651 (1964) (potential entrant doctrine)