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Old 02-15-2013, 10:46 PM #1
Rapier7
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An Example of Regulatory Overreach

http://professional.wsj.com/article/...NewsCollection

Belgium brewer AB InBev (merger of Anheuser-Busch and InBev) has agreed to forfeit about 4.5 billion dollars worth of assets in order to complete a 20 billion dollar takeover of Grupo Modelo, a large Mexican based brewer.

The key argument that Justice Department lawyers used to hold up the merger? Competition. They argued that such an acquisition would be anti-competitive because AB InBev could then jack up prices on both Corona and Budweiser.

Beer is not a natural monopoly. And the US domestic beer market is undergoing a change in which the large dominant brands (Budweiser and its sub-brands, Coors, Miller) are facing increasing competition with smaller breweries and microbreweries.

You guys might shrug your shoulders and say "whatever", but these are real issues for the companies and investors involved in these deals. When the Justice Department or any various Federal regulatory agency can block the sale of assets from one company to another, it represents a very real problem for the economy. It's one of the reasons why this economic recovery has been so incredibly weak.

We've seen Justice and the FCC block AT&T's offer for T-Mobile. The NLRB blocked an expansion of Boeing's factories in South Carolina. The EPA is still stalling the Keystone XL pipeline project.

Collectively, these actions have become a drag on the economy. And it's one of the key reasons why many CEOs, investors, and small business owners say that the Obama Administration has been very unfriendly towards business.
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Old 02-16-2013, 02:41 PM #2
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As for the FCC blocking AT&T's takeover of T-Mobile, whether or not that slowed the economy can be debated. And it DEFINITELY maintained competition, something good for consumers as well as the long-term health of that market. Blocking that merger has turned out very well for the wireless market.

It is prudent to slightly suppress swift economic recovery in favor of maintaining healthy markets that will be more stable and provide a better product over the long term. Maintaining competition is paramount to healthy markets, and it should be noted that competition is something businesses actively avoid/lobby against, often while crying about "fewer jobs" or other bull****.

Now if we can only get the FCC to do something about these god-awful ISPs...

edit: I don't know much about the beer market, but I do know microbreweries still have right around 5% market share. It's effectively a different market, and not particularly relevant to InBev.
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Last edited by Umami : 02-16-2013 at 02:55 PM.
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Old 02-16-2013, 05:59 PM #3
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Sounds like another stupid initiative coming out of the Justice Department. Just go to your local store and count how many brands of beer are available for purchase. To suggest that the merger would be anti-competitive seems to ignore the realities of what we see every day in the supermarket - a very competitive beer market with hundreds of choices available to the consumer. AB InBev could jack up the prices, but there's no shortage of alternatives for the average consumer, especially when it comes to good brew.
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Old 02-17-2013, 04:46 PM #4
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Quote:
Originally Posted by Umami View Post
And it DEFINITELY maintained competition, something good for consumers as well as the long-term health of that market. Blocking that merger has turned out very well for the wireless market.
How so? Tmobile customers are more limited in their choice of phones because of this. Economies of scale were thwarted. I haven't seen any significant change in plans. What do you base your assertion upon?

Quote:
Originally Posted by Umami View Post
It is prudent to slightly suppress swift economic recovery in favor of maintaining healthy markets that will be more stable and provide a better product over the long term. Maintaining competition is paramount to healthy markets, and it should be noted that competition is something businesses actively avoid/lobby against, often while crying about "fewer jobs" or other bull****.
Go to your local supermarket and local liquor store, count the number of different beers available, and post the number. Then tell us how little or how much competition there is in the beer market.

Quote:
Originally Posted by Umami View Post
Now if we can only get the FCC to do something about these god-awful ISPs...
Do tell.

Quote:
Originally Posted by Umami View Post
edit: I don't know much about the beer market, but I do know microbreweries still have right around 5% market share. It's effectively a different market, and not particularly relevant to InBev.
You don't know much about the beer market but we are supposed to take your word on this?
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Old 02-18-2013, 12:15 AM #5
rT159
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http://www.todayifoundout.com/index....s-holes-in-it/

Wanna talk about regulation? Just read up on this for my white collar crime class.

Quote:
Interestingly, the size of the holes in Swiss cheese sold in the United States is regulated by the U.S. Government. This is widely criticized by many Swiss cheese manufactures outside of the U.S., particularly in Switzerland, which tend to produce their cheese in a non-factory environment and thus, take more pride in the end product, rather then the bottom line. The reason for the protest is that the size of the holes is regulated by varying the curing time, acidity, and temperature, during the fermentation process, which typically lasts 60-100 days. These changes, however, also will significantly affect the texture and flavor of the cheese itself. Many foreign Swiss cheese manufactures claim that the regulations put forth by the American Government produce an inferior flavored Swiss cheese, hence the protest.

The U.S. Government created these regulations at the lobbying of commercial American Swiss cheese producers, who were having problems with their mechanical slicers cutting cheese when the Swiss cheese holes were too big, (typical sizes of the holes used to be around the size of a nickel). Rather than innovate or upgrade their equipment, they went with the age old practice of simply lobbying the government to make laws to fix their problem. Namely, to specify that, in order for Swiss cheese to be classified as “Grade A”, which is generally necessary for high volume sales in the United States, it must have holes no bigger than 3/8 of an inch, which is about half the typical size before these new regulations were put in place. This also significantly shortens the required aging time of North American style Swiss cheese, which also benefited the American mass-producers of the cheese.
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