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AB InBev Wins Appeal Affirming Dismissal of Antitrust Suit Over $123 Billion SABMiller Merger

On August 8, 2018, the United States Court of Appeals for the Ninth Circuit ruled in favor of Cravath client Anheuser‑Busch InBev SA/NV (“ABI”) in affirming the dismissal with prejudice of antitrust litigation filed by a group of 23 beer consumers from Oregon, Washington and California. Plaintiffs alleged that AB InBev’s acquisition of SABMiller PLC (“SAB”), proposed in November 2015, violated Section 7 of the Clayton Antitrust Act. They sought to permanently enjoin the company’s $123 billion merger, which closed in October 2016, claiming that the acquisition would create a monopoly in the production and distribution of beer in the United States, even though ABI committed to divest SAB’s interest in the MillerCoors joint venture, which constituted SAB’s entire U.S. business.

ABI moved to dismiss the Complaint, and in July 2016, following a two‑hour oral argument, Magistrate Judge Clarke of the U.S. District Court for the District of Oregon (Medford Division) issued a Report and Recommendation proposing the dismissal of the Complaint with prejudice. On October 3, 2016, Judge Aiken accepted the Recommendation and dismissed the suit with prejudice, on the basis that plaintiffs failed to show the deal would increase the merged company’s share in the U.S. beer market. Following the decision, plaintiffs appealed, seeking reversal of the dismissal and a right to file an amended complaint.

A three‑judge panel of the Ninth Circuit affirmed Judge Ann Aiken’s October 2016 dismissal with prejudice, holding that “any amendment would be futile.” In an opinion by Judge M. Margaret McKeown, the Ninth Circuit held that the plaintiffs failed to state a claim under the Clayton Act and “could not plead around the elephant in the room,” namely that “ABI’s acquisition of SAB did not create a reasonable probability of anticompetitive effects in the U.S. beer market because ABI did not acquire any business interests in the U.S. beer market.”

The Cravath team included partner Yonatan Even, who argued the appeal, senior attorney Lillian Grossbard and associate Greg C. Cheyne. Vadim Egoul also worked on this matter. The case is James DeHoog et al. v. Anheuser‑Busch InBev SA/NV et al., No. 16‑35912 (9th Cir.).