In July of this year, the US Department of Justice gave its blessing to AB InBev's proposed acquisition of SABMiller, meaning that the world's largest brewery will be allowed to combine its operations with the world's second largest brewery, rendering AB InBev what we call a "super mega brewery" in the legal world. 

AB InBev was formed by the merger of Interbrew of Belgium, AmBev of Brazil, and Anheuser-Busch of the United States. The company that would later be known as Anheuser-Busch was founded as the Bavarian Brewery in 1852 in St. Louis by German immigrant George Schneider. It was later purchased by Eberhard Anheuser and William D'Oench. In 1869, Anheuser's son-in-law, Adolphus Busch, purchased D'Oensch's share in the company and shortly thereafter it assumed the name Anheuser-Busch. The company was responsible for a number of notable innovations in beer making, with Busch being the first brewer to use pasteurization, the first to use mechanical refrigeration and refrigerated rail cars, and the first to sell bottled beer on the mass market. In the 1870s, Busch toured Europe to study various brewing techniques used there. One beer that particularly interested him was a lager brewed in the Czech city of Ceské Budejovice. When he returned to St. Louis, he emulated the style of that beer, naming his new creation "Budweiser," based on "Budweis," the German name for the city of Ceské Budejovice. Because of Busch's pioneering use of refrigerated shipping, Budweiser American Lager became the first mass produced national beer brand in the US, and remains one of the most iconic symbols of Americana to this day. The company now operates twelve breweries across the country and produces a wide variety of beers, including Busch, Michelob, Rolling Rock, Shock Top, and Natural Light (more affectionately known as "Natty Light" among American collegiate fraternal organizations) (Anheuser-Busch History). 

SABMiller is based in London and was formed by the 2002 merger of the South African Breweries (SAB) and the Miller Brewing Company. The Miller Brewing Company was founded in 1855 by Frederick Miller (born Friedrich Eduard Johannes Müller), a German immigrant who purchased the existing Plank Road Brewery outside of Milwaukee. Born into a wealthy and respectable family in Germany, Miller learned how to brew beer at his uncle's estate in France. Due to the political unrest that plagued Central Europe in the 1850s, Miller and his family emigrated to the US in 1854, eventually settling in Milwaukee. With the Plank Road Brewery in his hands, Miller continued to produce beer there in the style he had learned in the old country. His beer was immensely popular with the German community in Milwaukee and his empire grew and prospered. The Miller Brewing Company remained in the Miller family until 1966, whereafter it changed hands several times, including sales to W.R. Grace & Co. in 1966, Philip Morris in 1969, and SAB in 2002. Some of SABMiller's most popular beers include the classic Miller beers (Miller Genuine Draft, Miller Lite, and Miller High Life), Blue Moon, Foster's, and Leinenkugel's (Miller History).

The total cost for of AB InBev's purchase of its rival SABMiller is about $100 billion dollars. Due to the behemoth size of both of these companies, a combination of their operations would give AB InBev control over roughly 30% of the world's beer. Naturally, this prospect has raised some antitrust issues and the DOJ stepped in to review the deal. After months of review, the DOJ signed off on it, albeit with three major caveats: 

  1. AB InBev will sell SABMiller's stake in MillerCoors
  2. AB InBev will end its practice of rewarding distributors who sell more of their beer than their competitors
  3. All future acquisitions of craft breweries will be reviewed by the DOJ

Because AB InBev will sell SABMiller's stake in MillerCoors, the merger will have minimal impact on the US beer market, but will substantially increase AB InBev's access to SABMiller's operations in emerging markets in Latin America and Africa (Chicago Tribune). 

In the spirit of full disclosure, Juristat is based in St. Louis, home of Anheuser-Busch (the "AB" in AB InBev), which also serves as the North American headquarters for its parent company. As such, we like our beer and we've kept a close eye on this potential merger. And since we're in the business of evaluating companies' relative patent prosecution strengths, we wanted to see what shape both of these companies are in in that regard. So, after a little digging through our extensive collection of patent data we found out how well each company handles patent prosecution. What we discovered is that AB InBev stands to substantially improve its patent prosecution metrics with the acquisition of SABMiller. 

See the graphs below for our findings. 

As shown above, AB InBev stands to substantially increase its average allowance rate and substantially reduce its prosecution timeline with the acquisition. Usually when we compare two similar companies in this manner, the margins of victory are fairly small. While that pattern held true here for the average number of office actions, SABMiller's average allowance rate and speed to disposition were both significantly better than AB InBev's. Although the acquisition will not be a total win for AB InBev (SABMiller loses more claim scope), the substantial improvement in allowance rate and disposition speed likely will outweigh that setback. 

We will continue to keep an eye on this developing merger and bring you updates if there are any changes. In the meantime, all this writing about brewing companies has made the writer rather thirsty. Prost!

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