Breakthru and RNDC merger ‘would have resulted in higher prices’

The US government’s competition agency has confirmed it had “significant concerns” over the proposed merger of Breakthru Beverage Group and Republic National Distributing Company (RNDC), which was scrapped last week.

On 5 April, the two drinks distributors – both major players in the US – issued a statement announcing the termination of their proposed merger, which was first agreed in 2017.

The deal was sent to the Federal Trade Commission (FTC) for consideration, but was cancelled following a “protracted review”. The merger was initially expected to be finalised in the second quarter of last year.

According to Ian R Conner, deputy director of the FTC’s Bureau of Competition, the agency was concerned over “likely anticompetitive harm if the transaction were completed”.

He said: “Staff gathered extensive testimonial, documentary, and economic evidence to support our concerns that this transaction likely would have resulted in higher prices and diminished service in the distribution of wine and spirits in several states.

“The transaction likely would have adversely impacted suppliers of wine and spirits that depend on these distributors to promote and distribute their products, and retail and food-service customers that purchase those products from RNDC and Breakthru.

“Now that the deal has been abandoned, consumers will continue to benefit from meaningful competition between RNDC and Breakthru Beverage.”

The merger of Breakthru and RNDC would have resulted in the creation of a US$12 billion business and marked further consolidation within the US drinks distribution landscape.

RNDC distributes premium wine and spirits across the US, employing more than 9,500 people nationwide.

Breakthru, itself the result of the 2015 merger between Wirtz Beverage Group and Charmer Sunbelt Group, has 7,000 employees and owns operations across the US and Canada.

Both companies are, respectively, the second and third largest drinks distribution firms in the US. Southern Glazer’s is the largest drinks distributor in the market, and was formed following the merger of Southern Wine & Spirits and Glazer’s Inc in 2016.

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Author: Amy Hopkins {authorlink}