The ABI – Grupo Modelo Antitrust Charade
I’ve been asked repeatedly my take on the Department of Justice’s decision to fight the ABI – Grupo Modelo deal. None of the reporters who asked wanted to quote my response… it doesn’t fit into the narrative… although they all agreed. They’ve seen enough so that they are cynics too ;-)
Thus let me weigh in and tell you my cynical take on the DOJ’s decision to sue to stop this merger. I believe the decision comes down to a simply thing… ABI must not have greased the right palms and/or didn’t grease them enough.
Brito and crew were there at every Presidential debate......... but they must have been a little slow in reaching for the ol’ checkbook. Welcome to the new world of crony capitalism… well actually when it comes to antitrust enforcement, it seems that has always been a world heavily influenced by politics. Facts? Not so much. Political beliefs and who’s scratching whose back? Oh yeah.
Think I’m a cynic? Well duh. But think this analysis is wrong? Consider this:
- A two year DOJ investigation into Google’s practices recently ended with basically no action. Many articles have been written, and I mean many, on how during this time Google spent $25,000,000 on lobbying efforts. Most of the writers noted that this was a pretty good investment. And if you consider market power, etc. Google is far more “dangerous” to the public than ABI will ever be.
- Facebook now employees close to 15 lobbyists. Do you think they do this just because they like to piss money away?! This is the essence of crony capitalism. Equal treatment under the law? That’s for saps who don’t know how to play the game. And of course it gives tremendous power to our political overlords, who bestow their favors on the chosen few.
As for ABI, I’d guess they thought they would be dealing with a different administration and this deal would have sailed through… which it very likely would have. Same facts but different results.
So as you read the various handwringing’s over what ABI might have to do to get this blessing, don’t necessarily believe for a moment it is about hard facts and cold statistics. Those are only used as window dressing to support decisions that have already been made… and to bolster the power of these political overlords.
Think this rant is just Conlin going off the deep end again? This quote from an article in The National Review Online states how the game is played… “As law professor D. Daniel Sokol told the Wall Street Journal, in antitrust cases “Defining the market is 90% of the game. . . . If you win that battle, the rest is easy.” Every professor in my MBA program felt the same way.
You can read the entire article here, http://www.nationalreview.com/articles/339916/brew-busters-daniel-foster
And this process isn’t restricted to ABI. How many folks out there are either for this or against it based solely on what they think it means to them? Let’s at least drop the charade that this is about “market power” or protecting that helpless little consumer… it’s about winners and losers being decided by some political power. We cheer it when it lines our pockets… we curse it when it empties them.
Nothing less, nothing more. I have no ability to change this but I refuse to act as though this is really about the DOJ “protecting” the poor citizens of this country. It’s about protecting things, just not what they say it is.
Think about the supposed “solutions” that are being offered… selling a brewery is going to change the US beer market? Divesting a brand? That’s just the economic pain the government wants to inflict as payment to get this thing approved.
Since I don’t have the necessary facts to offer ABI a hard suggestion, I’ll instead answer with my gut… I wouldn’t give an inch on anything of importance. This isn’t ultimately about facts so why act as though it is? If I don’t want to piss away a ton of money over the next few years (and waste a lot of management time) I might tell them to screw off. About that penalty? You were foolish to give in and include it in the deal.Wait 3 more years and restart the deal. You already own 50% of the dang thing… you’re not going nowhere. There will be a new administration and next time either they will be more politically aligned with letting these deals happen or ABI can get better at writing the right checks to the right folks.
Isn’t this crony capitalism fun? ;-)