Justice Department Files Brief in Antitrust Case Involving Beer Sales in Canada

This week the Department of Justice filed a brief as Amicus Curiae in support of neither party in the Mountain Crest v. Anheuser-Busch InBev & Molson Coors litigation. This case is currently before the 7th Circuit and the court asked the Justice Department for their views on this interesting legal matter that bridges both antitrust and international law.

This case was brought by Mountain Crest which operates the Minhas Craft Brewery in Monroe, Wisconsin against Anheuser-Busch InBev and MillerCoors. Mountain Crest sued the larger breweries under both the Sherman Act and Wisconsin common law, alleging that a conspiracy between defendants has hindered its efforts to export its beer to Ontario, Canada. Mountain Crest claims it cannot sell larger quantities of beer at a discount in some Ontario liquor stores due to the activities of the defendants.

Judge James Peterson evaluated the complaint and noted that the conduct Mountain Crest challenges is governed by a contract with the government of Ontario, was subsequently reaffirmed, and was upheld by Canadian courts. As such Judge Peterson ruled that the defendants’ conduct is authorized under the “act of state” doctrine, which prohibits federal courts from invalidating the public acts of a foreign government. The district court granted the motion to dismiss Mountain Crest’s claims under the Sherman Act and declined to exercise supplemental jurisdiction over the state law claims. Mountain Crest appealed and the 7th Circuit sought the DOJ’s views.

The DOJ brief supports the dismissal of the claim under the “act of the state” doctrine articulated by Judge Peterson. It noted that “the district court correctly recognized …it would run afoul of the act of the state doctrine to measure the validity of the Ontario’s government’s official acts against the benchmark of U.S. antitrust law.”

However, the DOJ urged the 7th Circuit to remand to the district court for more fact-finding on the conspiracy claims Mountain Crest raised against the defendants and the DOJ believes they should be allowed to proceed further. The fact that the defendants are not only rival brewers in Canada but also manage and control the important beer retail operations in Ontario with the ability to harm smaller competitors greatly concerned the DOJ. I was disappointed to read that the defendants apparently “threatened the Government of Ontario with NAFTA expropriation litigation from their U.S. offices in St. Louis and Denver if the government undid the six pack restrictions.” Fortunately, the United States system does not have the same system of beer retailing as Canada.

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