Antitrust Lawyer Blog Commentary on Current Developments

FTC CHALLENGES PERNOD RICARD’S PROPOSED ACQUISITION OF V&S VIN & SPRIT

On July 17, 2008, the Federal Trade Commission (“FTC”) issued a complaint challenging the proposed $9 billion acquisition of V&S Vin & Sprit (“V&S”), a wholly owned corporation of the Kingdom of Sweden, by Pernod Ricard (“Pernod”), a wholly owned subsidiary of France-based Pernod. The FTC contends that the transaction is anticompetitive and violates U.S. antitrust laws.
This proposed transaction combines the two most popular “super-premium” vodkas sold nationwide, Absolut and Stolichnaya. In a consent order agreed to by Pernod, the FTC requires it to divest its distribution interests in Stolichnaya within six months of the acquisition. Furthermore, the acquisition of V&S will give Pernod control of Fortune Brands LLC, a joint venture between V&S and Fortune Brands, Inc. (“Fortune”). Pernod competes with Fortune’s subsidiary Beam Global Spirits & Wine (“Beam Global”) in four markets: cognac, domestic cordials, coffee liqueur, and popular gin. The proposed transaction could potentially give Pernod access to competitively sensitive information about the competing Beam Global brands. To remedy this problem, the FTC consent order requires Pernod to implement various firewalls to competitively sensitive information about Beam Global brands from being transferred to Pernod employees. An interim monitor will be appointed to oversee the implementation of the firewall. Finally, the consent order contains an “Order to Hold Separate” clause requiring Pernod to maintain and operate Stolichnaya separately and in its current form so that it can remain a viable competitor to Absolut.

The European Commission (“EC”) also reviewed the proposed transaction. On July 17, 2008 the EC approved the transaction. The approval was conditional on meeting anticompetitive concerns in several markets including aniseed flavored spirits in Finland, gin in Poland, vodka in Greece and cognac, port, Canadian whisky and gin in Sweden.

Robert Doyle
(202) 589-1834
rdoyle@dbmlawgroup.com