In most antitrust cases, market definition is a crucial issue. For instance, Baer won a landmark case in 1997 as head of the Federal Trade Commission's Bureau of Competition by convincing the court to narrowly define Staples and Office Depot as a distinct "superstore" market for office supplies.
In this case, however, the complaint defines beer as a single, massive market, though the government acknowledges that brewers group beers into four categories: sub-premium-lagers like Keystone or malt liquor; premium-brands such as Budweiser, Miller and Coors; premium plus-fancier premium beers like Bud Light Lime and Michelob, and high-end, which includes micro-brews and imported beers, the best-selling of which is Modelo’s Corona.
ABI dominates the premium category, while Modelo's strength is high-end. DOJ asserts that beers compete with each other across segments and that ABI and Modelo brands "are in regular competition."
What's less clear is whether a "small but significant and nontransitory increase in the price" in one category by a monopolist would also affect the prices in other categories.
The DOJ complaint stressed that Anheuser tends to lead the way on price increases, with MillerCoors following suit. Modelo, however, has more often declined to match price hikes, "encouraging consumers to trade up to Modelo brands." According to DOJ, Anheuser's premium brands such as Bud and Bud Light have lost market share to Corona because of Modelo's "aggressive pricing."
In addition to Baer, DOJ's brief was signed by Renate Hesse, Patricia Brink, Mark Ryan, James Tierney and Michelle Seltzer.
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