Beer brewery mergers could lead to short-term spikes in beer prices, a far cry from what merging companies claim when they say mergers usually benefit consumers, according to a research paper published on Thursday.
The study, which examines pricing and consolidation in the U.S. beer industry, found that after the 2008 merger of U.S. Molson Coors Brewing Company (NYSE:TAP) and SABMiller plc (LON:SAB) breweries, in the joint MillerCoors venture, prices increased slightly, by about two percent, in markets across the United States.
The study is one of the first to use empirical data to vet the standard corporate claim that consumers benefit from mergers, because of increased corporate efficiency, according to the authors.
That’s key because consumer impact is factored in when federal agencies like the Federal Trade Commission or the Department of Justice consider blocking a merger on anti-competitive concerns.
“Surprisingly, there is little evidence that efficiencies can offset incentives to raise prices following mergers,” reads the paper’s abstract, laying out the meagre state of research so far.
The idea that mergers can reduce prices has been the theoretical framework for antitrust analysis since 1968, wrote the authors, even though there’s little actual evidence on the connection between mergers and pricing.
In this case, though, authors added that after about three years, prices went back down, and were offset to usual levels thanks to lower production costs at the breweries.
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