Obama, Belgium, and Beer
August 25, 2009
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President Obama's top antitrust official, Christine Varney, has said that recessions can provide foundations for large companies to take advantage of a complacent business landscape, thus engaging in predatory behavior that can harm consumers and obstruct competition. It seems like the corporate environment may shift away from former President Bushs' more laissez-faire attitude toward the likes of the 1990's when big cases were brought against Microsoft (NYSE:MSFT) and Intel (Nasdaq:INTC).That's fine by me. Really, it is. In general, the more competition, the better.
But where were these rules in the past two years?
Whose bright idea was it to let InBev buy Anheuser-Busch? That great decision created the newly formed Belgian beer giant that distributes everything from Budweiser to Bass Ale to Hoegaarden to Rolling Rock. And then -- whose great idea was it to let Coors and Miller tag team up together? I mean talk about turning a blind eye.
The end result: two companies that control 80% of U.S. beer sales -- and whom, get this, "think the environment is very favorable" to raise beer prices. That's right -- both companies recently announced that they'll be raising beer prices this year. Last year they did the same thing, "coincedentally" at the same exact time.
And check this: over the past 12 months, the price of consumer goods has fallen by 2.1% (the largest 12 month decline since 1950!) -- but the price of beer has risen by 4.6%.
Does this fit the bill for an oligopoly or what? Fools -- weigh in!
-Jordan (who owns no shares of the companies mentioned above, but enjoyed a nice cold Boddingtons Ale with dinner tonight)
(Keep an eye out on this one: Ticketmaster (Nasdaq:TKTM) and Live Nation (NYSE:LYV) trying to merge -- if that happened, we'd be paying $300 for concert tickets and $100 for a beer at the show)
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