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investigation are claims 1 and 12 of the 1337(a)(3)(A) & (B), but to vacate the DEPARTMENT OF JUSTICE ’582 patent; claim 1 of the ’649 patent; ID’s value-added analysis (ID at 65–66). Antitrust Division and claims 1, 12, and 17 of the ’735 The Commission has determined that patent. the appropriate remedy in this On August 27, 2020, M–I filed a United States v. Anheuser-Busch investigation is a GEO prohibiting the InBev SA/NV, et al.; Response to motion for summary determination that unlicensed importation of certain shaker the Defaulting Respondents violated Public Comments screens for drilling fluids and section 337 and that M–I satisfies the components thereof that infringe claims Pursuant to the Antitrust Procedures domestic industry requirement of 1 and 12 of the ’582 patent; claim 1 of and Penalties Act, 15 U.S.C. 16(b)–(h), section 337. The motion sought issuance the United States hereby publishes of a general exclusion order (‘‘GEO’’) the ’649 patent; and claims 1, 12, and 17 below the Response to Public Comments and imposition of a one hundred of the ’735 patent. The Commission has on the Proposed Final Judgment in percent (100%) bond on accused further determined that the public United States v. Anheuser-Busch InBev products imported during the interest factors enumerated in section SA/NV, et al., Civil Action No. 4:20–cv– Presidential review period. On 337(d), 19 U.S.C. 1337(d), do not 01282–SRC, which was filed in the September 16, 2020, OUII filed a preclude issuance of the GEO. Finally, United States District Court for the response supporting M–I’s motion, the Commission has determined that a Eastern District of Missouri on March including the remedial relief requested bond in the amount of one hundred 17, 2021, together with a copy of the therein. (100) percent of the entered value of the two comments received by the United imported articles that are subject to the On November 19, 2020, the ALJ States. issued the subject ID granting M–I’s GEO is required to permit temporary motion and recommending issuance of importation of the articles in question A copy of the comments and the a GEO and imposition of a bond in the during the period of Presidential review, United States’ response to the comments amount of 100 percent of the entered 19 U.S.C. 1337(j). The investigation is is available at https://www.justice.gov/ atr/case/us-v-anheuser-busch-inbev- value of infringing products. hereby terminated in its entirety. Specifically, the ID found that (1) the sanv-et-al. Copies of the comments and The Commission’s order and opinion the United States’ response are available Commission has jurisdiction over the were delivered to the President and to products, the parties, and the for inspection at the Office of the Clerk the United States Trade Representative investigation; (2) the importation of the United States District Court for on the day of their issuance. The requirement is satisfied; (3) M–I has the Eastern District of Missouri. Copies standing to bring this investigation; (4) Commission has also notified the of these materials may also be obtained all of the remaining asserted claims are Secretary of the Treasury and Customs from the Antitrust Division upon infringed by one or more of the and Border Protection of the order. request and payment of the copying fee Defaulting Respondents’ products; and The Commission vote for these set by Department of Justice regulations. (5) M–I has satisfied the domestic determinations took place on March 18, Suzanne Morris, industry requirement of section 337. 2021. Chief, Premerger and Division Statistics, Additionally, the ALJ recommended The authority for the Commission’s Antitrust Division. that the Commission issue a GEO and determination is contained in section impose a bond in the amount of one United States District Court for the 337 of the Tariff Act of 1930, as hundred percent (100%) of the entered Eastern District of Missouri Eastern amended (19 U.S.C. 1337), and in Part value of infringing articles imported Division 210 of the Commission’s Rules of during the period of Presidential review. United States of America, Plaintiff, v. Practice and Procedure (19 CFR part On January 4, 2021, the Commission Anheuser-Busch INBEV SA/NV, Anheuser- determined to review the ID’s finding 210). Busch Companies, LLC, and Craft Brew that M–I’s investments in plant and While temporary remote operating Alliance, Inc., Defendants. equipment and M–I’s employment of procedures are in place in response to Civil Action No.: 4:20–cv–01282–SRC labor and capital are significant under COVID–19, the Office of the Secretary is Response of Plaintiff United States to section 337(a)(3)(A) and (B). Notice (Jan. not able to serve parties that have not Public Comments on the Proposed Final 4, 2021). The Commission also sought retained counsel or otherwise provided Judgment briefing on remedy, bonding, and the a point of contact for electronic service. public interest. M–I filed a submission Accordingly, pursuant to Commission Pursuant to the requirements of the in response on January 19, 2021 and Rules 201.16(a) and 210.7(a)(1) (19 CFR Antitrust Procedures and Penalties Act filed a corrected version of that response 201.16(a), 210.7(a)(1)), the Commission (the ‘‘APPA’’ or ‘‘Tunney Act’’), 15 on January 22, 2021. OUII filed a orders that the Complainant(s) complete U.S.C. 16(b)–(h), the United States submission in response on January 19, service for any party/parties without a hereby responds to the two public 2021 and filed a reply submission on method of electronic service noted on comments received regarding the January 26, 2021. No submissions were the attached Certificate of Service and proposed Final Judgment in this case. received from the public. shall file proof of service on the After careful consideration of the Having reviewed the written Electronic Document Information submitted comments, the United States submissions and the evidentiary record, System (EDIS). continues to believe that the divestiture the Commission has determined to required by the proposed Final affirm the ID’s finding that M–I satisfied By order of the Commission. Judgment provides an effective and the economic prong of the domestic Issued: March 18, 2021. appropriate remedy for the antitrust industry requirement on the basis that Lisa Barton, violation alleged in the Complaint and M–I made significant investments in Secretary to the Commission. is therefore in the public interest. The plant and equipment and significant United States will move the Court for [FR Doc. 2021–06016 Filed 3–23–21; 8:45 am] employment of labor under section entry of the proposed Final Judgment 337(a)(3)(A) & (B), 19 U.S.C. BILLING CODE 7020–02–P after the public comments and this

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response have been published as II. The Complaint and the Proposed thereby restoring the competition that required by 15 U.S.C. 16(d). Final Judgment would otherwise likely be lost as a result of the transaction. PV Brewing I. Procedural History The Complaint alleges that ABI’s proposed acquisition of CBA would has elected to exercise its options and On November 11, 2019, Defendant likely eliminate important existing entered into supply, distribution, and Anheuser-Busch Companies, LLC (‘‘AB transition services agreements with ABI, Companies’’), a minority shareholder in head-to-head competition in the state of Hawaii between ABI’s beer brands and as permitted by the proposed Final Defendant Craft Brew Alliance, Inc. Judgment. (‘‘CBA’’), agreed to acquire all of CBA’s CBA’s beer brands, particularly CBA’s remaining shares in a transaction valued Kona brand. Specifically, CBA’s Kona III. Standard of Judicial Review brand competes closely with ABI’s at approximately $220 million. AB The Clayton Act, as amended by the Stella Artois and Michelob Ultra brands, Companies is a wholly-owned APPA, requires that proposed consent and also competes with ABI’s Bud Light subsidiary of Defendant Anheuser- judgments in antitrust cases brought by and Budweiser brands. The Complaint Busch InBev SA/NV (‘‘ABI’’). After a the United States be subject to a 60-day also alleges that, but for the merger, the thorough and comprehensive comment period, after which the Court competition between ABI and CBA in investigation, the United States filed a shall determine whether entry of the Hawaii likely would have grown civil antitrust Complaint on September proposed Final Judgment ‘‘is in the significantly because CBA was investing 18, 2020, seeking to enjoin the proposed public interest.’’ 15 U.S.C. 16(e)(1). In in its business in Hawaii, had plans to transaction because it would making that determination, the Court, in significantly grow its share of beer substantially lessen competition for beer accordance with the statute as amended volume sold in Hawaii, and planned to sold in the state of Hawaii, in violation in 2004, is required to consider: of Section 7 of the Clayton Act, 15 open a new brewery in 2021. The (A) The competitive impact of such U.S.C. 18. See Dkt. No. 1. Complaint also alleges that the transaction would likely facilitate price judgment, including termination of alleged At the same time the Complaint was violations, provisions for enforcement and filed, the United States filed a proposed coordination between ABI and Molson modification, duration of relief sought, Final Judgment and an Asset Coors Beverage Company in Hawaii. anticipated effects of alternative remedies Preservation and Hold Separate This likely reduction in existing and actually considered, whether its terms are Stipulation and Order (‘‘Stipulation and future competition would result in ambiguous, and any other competitive Order’’) in which the United States and higher prices and reduced innovation considerations bearing upon the adequacy of Defendants consented to entry of the for consumers in Hawaii, in violation of such judgment that the court deems proposed Final Judgment after Section 7 of the Clayton Act, 15 U.S.C. necessary to a determination of whether the 18. consent judgment is in the public interest; compliance with the requirements of the and Tunney Act. See Dkt. No. 2–1. On The proposed Final Judgment (B) the impact of entry of such judgment September 25, 2020, the Court entered remedies the harm to competition upon competition in the relevant market or the Stipulation and Order. See Dkt. No. alleged in the Complaint by requiring a markets, upon the public generally and 14. On October 6, 2020, the divestiture divestiture that will establish an individuals alleging specific injury from the contemplated by the proposed Final independent, economically viable violations set forth in the complaint Judgment was effectuated to PV Brewing competitor in the state. It requires including consideration of the public benefit, Partners, LLC (‘‘PV Brewing’’). On Defendants to divest Kona Brewery, LLC if any, to be derived from a determination of the issues at trial. October 26, 2020, the United States filed (‘‘Kona Hawaii’’), which includes CBA’s a Competitive Impact Statement, entire Kona brand business in the state 15 U.S.C. 16(e)(1)(A) & (B). In describing the transaction and the of Hawaii, as well as other related considering these statutory factors, the proposed Final Judgment. See Dkt. No. tangible and intangible assets, to an Court’s inquiry is necessarily a limited 17. acquirer approved by the United States. one as the government is entitled to On October 30, 2020, the United ABI proposed PV Brewing as the ‘‘broad discretion to settle with the States published the proposed Final acquirer. After a rigorous and defendant within the reaches of the Judgment and the Competitive Impact independent evaluation, the United public interest.’’ United States v. Statement in the Federal Register, see States approved PV Brewing as the Microsoft Corp., 56 F.3d 1448, 1461 85 FR 68918 (October 30, 2020), and acquirer. PV Brewing is a well-financed (D.C. Cir. 1995); United States v. caused notice regarding the same, company, backed by private equity, that Associated Milk Producers, Inc., 534 together with directions for the is incentivized to compete aggressively F.2d 113, 117 (8th Cir. 1976) (‘‘It is submission of written comments in the Hawaii beer market. In addition, axiomatic that the Attorney General relating to the proposed Final Judgment, the operational leadership of PV must retain considerable discretion in to be published in the Washington Post Brewing has extensive experience in the controlling government litigation and in from October 30, 2020, through brewing, developing, packaging, determining what is in the public November 5, 2020; the St. Louis Post- importing, distributing, marketing, interest.’’); United States v. U.S. Dispatch from October 30, 2020, promoting, and selling of beer. Airways Grp., Inc., 38 F. Supp. 3d 69, through November 7, 2020; and the The proposed Final Judgment also 75 (D.D.C. 2014) (explaining that the Honolulu Star-Advertiser from October allows the acquirer, at its option, to ‘‘court’s inquiry is limited’’ in Tunney 30, 2020, through November 9, 2020. enter into a supply contract, distribution Act settlements); United States v. InBev The 60-day public comment period agreement, and transition services N.V./S.A., No. 08–1965 (JR), 2009 U.S. ended on January 8, 2021. The United agreement with ABI. These divestiture Dist. LEXIS 84787, at *3 (D.D.C. Aug. States received two public comments. assets and optional supply, distribution, 11, 2009) (noting that a court’s review See Tunney Act Comment of the and transition services agreements— of a consent judgment is limited and Attorney General of Hawaii on the which are similar to agreements that only inquires ‘‘into whether the Proposed Final Judgment, attached as CBA had with ABI prior to the government’s determination that the Exhibit A; Tunney Act Comment of transaction—will enable the acquirer to proposed remedies will cure the Maui Brewing Co., attached as Exhibit compete effectively from day one in the antitrust violations alleged in the B. market for beer in the state of Hawaii, complaint was reasonable, and whether

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the mechanisms to enforce the final evaluating objections to settlement United States in antitrust enforcement, judgment are clear and manageable’’). agreements under the Tunney Act, a Public Law 108–237 § 221, and added Under the APPA, a court considers, court must be mindful that [t]he the unambiguous instruction that among other things, the relationship government need not prove that the ‘‘[n]othing in this section shall be between the remedy secured and the settlements will perfectly remedy the construed to require the court to specific allegations in the government’s alleged antitrust harms[;] it need only conduct an evidentiary hearing or to complaint, whether the proposed Final provide a factual basis for concluding require the court to permit anyone to Judgment is sufficiently clear, whether that the settlements are reasonably intervene.’’ 15 U.S.C. 16(e)(2); see also its enforcement mechanisms are adequate remedies for the alleged U.S. Airways, 38 F. Supp. 3d at 76 sufficient, and whether it may positively harms.’’) (internal citations omitted); (indicating that a court is not required harm third parties. See Microsoft, 56 United States v. Republic Servs., Inc., to hold an evidentiary hearing or to F.3d at 1458–62. With respect to the 723 F. Supp. 2d 157, 160 (D.D.C. 2010) permit intervenors as part of its review adequacy of the relief secured by the (noting ‘‘the deferential review to which under the Tunney Act). This language proposed Final Judgment, a court may the government’s proposed remedy is explicitly wrote into the statute what not ‘‘ ‘make de novo determination of accorded’’); United States v. Archer- facts and issues.’ ’’ United States v. W. Daniels-Midland Co., 272 F. Supp. 2d 1, Congress intended when it first enacted Elec. Co., 993 F.2d 1572, 1577 (D.C. Cir. 6 (D.D.C. 2003) (‘‘A district court must the Tunney Act in 1974. As Senator 1993) (quoting United States v. Mid-Am. accord due respect to the government’s Tunney explained: ‘‘[t]he court is Dairymen, Inc., No. 73 CV 681–W–1, prediction as to the effect of proposed nowhere compelled to go to trial or to 1977 WL 4352, at *9 (W.D. Mo. May 17, remedies, its perception of the market engage in extended proceedings which 1977)); see also Microsoft, 56 F.3d at structure, and its view of the nature of might have the effect of vitiating the 1460–62; United States v. Alcoa, Inc., the case’’); see also Mid-Am. Dairymen, benefits of prompt and less costly 152 F. Supp. 2d 37, 40 (D.D.C. 2001); 1977 WL 4352, at *9 (‘‘The APPA settlement through the consent decree United States v. Enova Corp., 107 F. codifies the case law which established process.’’ 119 Cong. Rec. 24,598 (1973) Supp. 2d 10, 16 (D.D.C. 2000); InBev, that the Department of Justice has a (statement of Sen. Tunney). ‘‘A court 2009 U.S. Dist. LEXIS 84787, at *3. range of discretion in deciding the terms can make its public interest Instead, ‘‘[t]he balancing of competing upon which an antitrust case will be determination based on the competitive social and political interests affected by settled’’). The ultimate question is impact statement and response to public a proposed antitrust consent decree whether ‘‘the remedies [obtained by the comments alone.’’ U.S. Airways, 38 F. must be left, in the first instance, to the Final Judgment are] so inconsonant with Supp. 3d at 76 (citing Enova Corp., 107 discretion of the Attorney General.’’ W. the allegations charged as to fall outside F. Supp. 2d at 17). Elec. Co., 993 F.2d at 1577 (quotation of the ‘reaches of the public interest.’’’ marks omitted). Microsoft, 56 F.3d at 1461 (quoting W. IV. Summary of Comments and the ‘‘The court should bear in mind the Elec. Co., 900 F.2d at 309). United States’ Response flexibility of the public interest inquiry: Moreover, the Court’s role under the the court’s function is not to determine APPA is limited to reviewing the The United States received two public whether the resulting array of rights and remedy in relationship to the violations comments in response to the proposed liabilities is one that will best serve that the United States has alleged in its Final Judgment. One comment is from society, but only to confirm that the complaint, and does not authorize the the State of Hawaii through its Office of resulting settlement is within the Court to ‘‘construct [its] own the Attorney General (‘‘Hawaii AG’’). reaches of the public interest.’’ hypothetical case and then evaluate the The other comment is from Maui Microsoft, 56 F.3d at 1460 (quotation decree against that case.’’ Microsoft, 56 Brewing Co. (‘‘Maui Brewing’’), which marks omitted); see also United States v. F.3d at 1459; see also U.S. Airways, 38 describes itself as Hawaii’s ‘‘largest craft Deutsche Telekom AG, No. 19–2232 F. Supp. 3d at 75 (noting that the court brewer.’’ Exhibit B at 1. Maui Brewing (TJK), 2020 WL 1873555, at *7 (D.D.C. must simply determine whether there is sought to purchase the divestiture assets Apr. 14, 2020). More demanding a factual foundation for the by submitting an ‘‘Indication of requirements would ‘‘have enormous government’s decisions such that its Interest’’ to ABI, but was not selected by practical consequences for the conclusions regarding the proposed ABI as the proposed acquirer. Id. at 2. government’s ability to negotiate future settlements are reasonable); InBev, 2009 The overarching concern raised by settlements,’’ contrary to congressional U.S. Dist. LEXIS 84787, at *20 (‘‘[T]he both the Hawaii AG and Maui Brewing intent. Id. at 1456. ‘‘The Tunney Act ‘public interest’ is not to be measured by is that the acquirer, PV Brewing, will was not intended to create a comparing the violations alleged in the continue to significantly rely on ABI disincentive to the use of the consent complaint against those the court such that it will not compete decree.’’ Id.; see also United States v. believes could have, or even should independently with, nor constrain, ABI. Mid-Am. Dairymen, Inc., No. 73 CV have, been alleged’’). Because the More specifically, the concerns raised 681–W–1, 1977 WL 4352, at *9 (W.D. ‘‘court’s authority to review the decree Mo. May 17, 1977) (‘‘It was the intention depends entirely on the government’s by the Hawaii AG and Maui Brewing of Congress in enacting [the] APPA to exercising its prosecutorial discretion by can be grouped into five categories: (1) preserve consent decrees as a viable bringing a case in the first place,’’ it ABI will retain the rights to the Kona enforcement option in antitrust cases.’’). follows that ‘‘the court is only brand outside of Hawaii; (2) the acquirer The United States’ predictions about authorized to review the decree itself,’’ may enter into a distribution agreement the efficacy of the remedy are to be and not to ‘‘effectively redraft the with ABI’s wholly-owned distributor, as afforded deference by the Court. See, complaint’’ to inquire into other matters CBA did prior to the transaction; (3) the e.g., Microsoft, 56 F.3d at 1461 that the United States did not pursue. acquirer may enter into a supply (recognizing courts should give ‘‘due Microsoft, 56 F.3d at 1459–60. contract with ABI to brew and package respect to the Justice Department’s . . . In its 2004 amendments to the APPA, at least some of its beer, as CBA did view of the nature of its case’’); United Congress made clear its intent to prior to the transaction; (4) the acquirer States v. Iron Mountain, Inc., 217 F. preserve the practical benefits of using may enter into a temporary transition Supp. 3d 146, 152–53 (D.D.C. 2016) (‘‘In consent judgments proposed by the services agreement with ABI; and (5) the

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process by which ABI selected the Consistent with this principle, when branded products in Hawaii—the state proposed acquirer was unfair.1 a license for a product ‘‘covers the right where the competitive harm is alleged For these reasons, the Hawaii AG to compete in multiple product or to occur. As such, the acquirer will be asserts that the proposed Final geographic markets, yet the merger fully empowered and incentivized to Judgment fails to protect competition, adversely affects competition in only a compete and grow its sales in Hawaii, although the Hawaii AG chose not to subset of these markets, the [Antitrust] thereby preserving the competition that exercise its own independent authority Division will insist only on the sale or would otherwise be lost as a result of to challenge the transaction under the license of rights necessary to maintain the transaction. competition in the affected markets.’’ antitrust laws. For its part, Maui B. The Distribution Relationship With DOJ Merger Remedies Manual at 7 n.25; Brewing contends that, due to the ABI Is Optional and Terminable concerns above, it should be the see also United States v. Iron Mountain, acquirer of the divestiture assets instead Inc., 217 F. Supp. 3d 146, 152–53 The Hawaii AG and Maui Brewing of PV Brewing. (D.D.C. 2016) (rejecting complaining express concern that the proposed Final competitor’s request that the Final Judgment permits the acquirer to enter A. The Remedy Creates an Independent, Judgment be broadened to allow all into a distribution agreement with ABI’s Robust Competitor in Hawaii Where the customers—regardless of their wholly-owned distributor. See Exhibit A Competitive Harm was Likely to Occur location—to terminate their contracts at 3–7; Exhibit B at 2. More specifically, The Hawaii AG and Maui Brewing with the parties without incurring fees the Hawaii AG asserts that the express concern that ABI retains the because that would far exceed what is distribution agreement gives ABI rights to sell Kona-branded beer outside necessary to remedy the harm alleged in ‘‘control and authority’’ over the price of of Hawaii following the divestiture. See the complaint limited to 15 geographic the acquirer’s Kona-branded beer, Exhibit A at 2–3; Exhibit B at 2. In their markets). Exhibit A at 3, ‘‘pav[ing] the way for view, ABI’s ability to sell Kona-branded The divestiture assets encompass Molson Coors to follow any price beer outside of Hawaii could impede the Kona Hawaii, CBA’s entire Kona brand increases announced by [ABI] in acquirer’s ability to compete effectively business unit in the state, including a Hawaii,’’ id. at 4, and giving ABI the in the market for beer in Hawaii. There restaurant, a brewery, a brewpub, a new ‘‘ability to prevent PV [Brewing] from is no basis for this concern; the brewery that is currently under competing against other beers sold by proposed Final Judgment grants the construction, and an exclusive, ABI,’’ id. at 5. These assertions are acquirer the assets, rights, and irrevocable, perpetual, and fully paid-up incorrect. personnel it needs to be a robust license to Kona-branded products in Brewers must have access to competitor in Hawaii, the only state in Hawaii, which gives the acquirer the distribution channels to compete effectively in the beer industry. To give which the transaction would have sole right to sell Kona-branded products the acquirer access to distribution otherwise harmed competition. in Hawaii. See Dkt. No. 2–1, Exhibit A channels from day one, the proposed In this case, the Complaint alleges (Proposed Final Judgment, Para. II.I., Final Judgment provides for a harm to competition in a geographic M.–O.). The license grants the acquirer distribution agreement with ABI’s market ‘‘no larger than the state of the sole right to innovate and develop wholly-owned subsidiary in the state. Hawaii.’’ See Dkt. No. 1 (Complaint new products using the Kona brand The distribution arrangement set forth ¶ 19). The overarching purpose of a name and sell them in Hawaii. This in the proposed Final Judgment merely merger remedy is to restore the right is important as beer brewers affords the acquirer the option to competition lost by the transaction. See increasingly compete with one another continue a distribution relationship that Ford Motor Co. v. United States, 405 by developing innovative products that existed between CBA and ABI prior to U.S. 562, 573 (1972) (‘‘The relief in an are marketed using established beer brand names. Similarly, the license the transaction. See Exhibit A at 3 antitrust case must be ‘effective to (acknowledging that ABI distributed redress the violations’ and ‘to restore grants the acquirer the sole right to develop Hawaii-specific marketing CBA’s beer in Hawaii prior to the competition.’’’) (quoting United States transaction). As the Complaint alleges, v. E. I. Du Pont De Nemours & Co., 366 promotions or Hawaii-specific packaging for the beer brewed at the during the time when ABI and CBA had U.S. 316, 326 (1961)); see also U.S. Dep’t a distribution relationship, CBA of Justice, Merger Remedies Manual new brewery, once it is operational. Paragraph IV.I. of the proposed Final competed head to head with ABI and (2020) (‘‘DOJ Merger Remedies Judgment establishes mechanisms by constrained ABI’s ability to coordinate Manual’’) at 3, available at https:// which the acquirer can hire personnel higher prices in Hawaii. For example, www.justice.gov/atr/page/file/1312416/ 2 formerly employed by Kona Hawaii. the Complaint states that ‘‘ABI and CBA download. Therefore, it is appropriate Indeed, the United States understands compete directly against each other in for the merger remedy here to focus on that the Kona Hawaii leadership team Hawaii,’’ Complaint ¶ 25; that ‘‘Molson restoring competition in the state of has already joined PV Brewing. Those Coors’s willingness to follow ABI’s Hawaii. personnel will further enhance PV announced price increases is Brewing’s ability to compete effectively constrained’’ by ‘‘CBA and its Kona 1 The Hawaii AG also raises an issue regarding the in Hawaii. And the divestiture will labels that it believes should be affixed to beer brand,’’ Complaint ¶ 30; and that ‘‘the products brewed outside of the state of Hawaii. See enhance Kona Hawaii’s independence competition provided by CBA’s Kona in Exhibit A at 10 n.23. To the extent the State of from ABI. Before the transaction, ABI the premium segment serves as an Hawaii wishes to require brewers to disclose the held an approximate 31% stake in CBA important constraint on the ability of source of beer sold in the state of Hawaii, that is and, by extension, in Kona Hawaii. See a matter unrelated to the antitrust violation alleged ABI to raise its beer prices,’’ Complaint 3 in the Complaint and, as such, is outside the Complaint ¶ 13. Following the ¶ 16. After the divestiture, the acquirer purview of the Court’s review under the Tunney divestiture, ABI will no longer own any Act. See Microsoft, 56 F.3d at 1459–60. stake in Kona Hawaii. 3 The Complaint is taken as true for purposes of 2 ‘‘The purpose of this manual is to provide Regardless of ABI’s rights to the Kona evaluating whether a remedy is adequate in a [Antitrust] Division attorneys and economists with Tunney Act Proceeding. See United States v. a framework for structuring and implementing brand in other geographies more than Microsoft Corp., 56 F.3d 1448, 1459 (D.C. Cir. 1995). appropriate relief short of a full-stop injunction in 2,000 miles away, the acquirer will be Commenters are not permitted to construct their merger cases.’’ Id. at 2. the sole owner of the rights to sell Kona- Continued

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will have the ability and incentive to Further, as noted above, the proposed otherwise modified without the continue to offer at least this same level Final Judgment establishes mechanisms approval of the United States. of competition, even if it chooses to by which PV Brewing can hire The proposed Final Judgment contract with ABI for distribution personnel formerly employed by Kona provides the acquirer with the flexibility services, just as CBA did before the Hawaii. See id. at Para. IV.I. The Kona to choose its own preferred supplier, transaction. Hawaii leadership team’s experience in whether that is ABI or another brewer Here, the proposed Final Judgment the Hawaii beer industry further on the mainland. In making this requires that the distribution agreement enhances PV Brewing’s ability to select decision, the acquirer’s incentive will be be sufficient to meet the acquirer’s the distribution channels that allow it to to employ the contract brewer that most needs, as the acquirer determines, and compete most effectively in the state. effectively brews and ships its beer. The last for a period of time as determined approved acquirer, PV Brewing, has the by the acquirer. See Dkt. No. 2–1, C. The Contract Brewing Relationship expertise necessary to make this choice Exhibit A (Proposed Final Judgment, With ABI Is Optional, Non-Exclusive, for itself. Para. IV.O.). The distribution agreement and Temporary The Hawaii AG lists various factors with ABI’s wholly-owned distributor is The Hawaii AG and Maui Brewing that it contends could make it less than optional, which provides the acquirer express concern about allowing the ‘‘viable’’ for PV Brewing to switch to a with the ability to choose its own acquirer, at its option, to engage ABI to new contract brewer. Exhibit A at 10. preferred method of distribution, brew and package Kona beer for the The Hawaii AG, however, does not offer whether that is ABI’s wholly-owned acquirer to sell in Hawaii. See Exhibit any reason to conclude that non-ABI distributor or another distributor in the A at 8–10; Exhibit B at 2. The Hawaii contract brewers are incapable of state of Hawaii. In making this decision, AG contends that PV Brewing ‘‘will managing ‘‘the intricacies of switching,’’ the acquirer’s incentive will be to remain reliant on ABI for the maintaining ‘‘quality control and employ the distributor that most production, packaging, and delivery of consistency,’’ or ensuring ‘‘sufficient effectively sells its beer in competition beer’’ sufficient to meet PV Brewing’s production quantities’’ for PV Brewing’s with ABI and other rivals. The approved needs until the new brewery is needs. Id. acquirer, PV Brewing, has the expertise operational, and so long as PV Brewing The Hawaii AG also expresses necessary to make this choice for itself. sells bottled beer in Hawaii. Exhibit A concern that ABI does not have PV Brewing’s operational leadership has at 9–10. adequate motivation to complete extensive experience in the beer The United States agrees that until the construction of the new brewery and industry, including negotiating new brewery in Hawaii is operational, that a delay in completing the brewery distribution agreements. the acquirer will need to arrange for may lengthen the time the acquirer Even after entering into a distribution another brewer to brew its canned and needs a supply contract. See Exhibit A agreement with ABI’s wholly-owned kegged beer in order to compete in at 8–9. The proposed Final Judgment distributor, the acquirer will be able to Hawaii. Similarly, so long as the establishes strong incentives for ABI to terminate the agreement without cause, acquirer wishes to sell bottled beer in complete the new brewery promptly. It beginning one year after the agreement’s Hawaii, the acquirer will need to requires ABI to continue construction of effective date. See id. Thus, if ABI’s arrange for another brewer to brew and the new brewery and to achieve an wholly-owned distributor prices the ship the acquirer’s bottled beer to average production capacity of 1,500 Kona-branded products too high or too Hawaii.5 To ensure the uninterrupted barrels of saleable beer each calendar low to retailers or otherwise fails to supply of Kona-branded beer to sell in week for three consecutive calendar market the Kona-branded products Hawaii, the proposed Final Judgment weeks at the new brewery, within 180 effectively, the acquirer will be able to requires ABI to enter into a non- days of the Court’s entry of the shift its Kona-branded products to exclusive supply contract for the Stipulation and Order (that is, by March another distributor. The threat of production, packaging, and delivery of 24, 2021). See Dkt. No. 2–1, Exhibit A termination without cause will beer sufficient to meet the acquirer’s (Proposed Final Judgment, Para. IV.B.). incentivize ABI’s wholly-owned needs, as the acquirer determines and at If ABI fails to reach that production distributor to promote and sell the the acquirer’s option. metric by the deadline, it is required to Kona-branded products to the acquirer’s As set forth in Paragraph IV.N. of the pay the United States $25,000 per day satisfaction in order to retain the proposed Final Judgment, the contract until it achieves the metric. See id. at popular Kona brand in its portfolio.4 brewing relationship with ABI does not Para. IV.C. Once the new brewery is impose any constraints on the acquirer. operational, the acquirer will be able to ‘‘own hypothetical case and then evaluate the The contract has no minimum or brew and package canned and kegged decree against that case.’’ Id. maximum volume requirements, and it beer for sale in Hawaii. 4 The Hawaii AG asserts, based on an excerpt is non-exclusive. The acquirer is free to The Hawaii AG and Maui Brewing from CBA’s 2018 10–K filing, see Exhibit A at 6, that it would be costly and ‘‘daunting’’ for PV engage companies other than ABI to express doubt that the new brewery will Brewing to terminate its distribution contract with brew its beer for sale in Hawaii, either be capable of supplying all of PV ABI’s wholly-owned distributor and switch the to supplement ABI’s production or to Brewing’s beer, even once it is built. See Kona-branded products to a new distributor. But replace ABI. This optional supply Exhibit A at 9; Exhibit B at 2–3. When the quoted language relates to CBA’s former contract with ABI covering distribution throughout contract is limited to five years fully operational, however, the new the United States, not the contract between PV maximum to ensure that the acquirer brewery is expected to produce enough Brewing and ABI’s wholly-owned distributor will become a fully independent beer to meet present demand for canned covering distribution of Kona-branded products in competitor to ABI. The supply contract and kegged Kona beer in Hawaii. And Hawaii. As discussed above, in the distribution agreement permitted by the proposed Final cannot be extended, amended, or there are contract brewers, other than Judgment, the acquirer holds the threat of ABI, on the mainland with available termination without cause, which will incentivize 5 As noted in the Competitive Impact Statement brewing capacity to whom PV Brewing ABI’s wholly-owned distributor to promote and sell (Dkt. No. 17 at pg. 15), very little beer brewed in can turn to supply beer—bottled beer or the Kona-branded products to the acquirer’s Hawaii is bottled in Hawaii because there is no satisfaction. In addition, in the beer industry, rival large-scale production of glass beer bottles on the otherwise—as needed. distributors typically pay the costs of switching a islands and importing empty glass bottles is Lastly, CBA had a brewing contract brand to their portfolios. prohibitively expensive for most brewers. with ABI prior to the transaction. See

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Complaint ¶ 13 (‘‘ABI . . . has a The transition services agreement IV.E. of the proposed Final Judgment contract with CBA to brew some CBA permitted by the proposed Final requires divestiture to an acquirer that brands of beer at ABI breweries’’). The Judgment is also temporary, lasting up ‘‘has the intent and capability contract brewing provision in the to a maximum of 18 months. The (including the necessary managerial, proposed Final Judgment preserves for acquirer has the right under the operational, technical, and financial the acquirer the option to continue a proposed Final Judgment to terminate capability) to compete effectively in the brewing relationship that allowed CBA any transition services agreement (or brewing, developing, packaging, to compete effectively in the relevant any portion of one), without cost or importing, distributing, marketing, market, including against ABI. penalty, at any time upon notice to ABI. promoting, and selling of Beer in the To the extent either the acquirer or ABI State of Hawaii.’’ Regardless of the D. The Transition Services Agreement seeks to extend, or otherwise amend or process by which ABI selected PV With ABI Is Optional, Limited, modify a transition services agreement, Brewing as the proposed acquirer, the Temporary, and Terminable those extensions, amendments, and United States rigorously and The Hawaii AG expresses concern modifications must be approved by the independently evaluated PV Brewing as that the proposed Final Judgment makes United States. the proposed acquirer, including the available to PV Brewing a transition The Hawaii AG asserts that PV qualifications, experience, incentives, services agreement with ABI, thereby Brewing may need to rely on ABI for business plans, finances, and giving ABI ‘‘influence’’ over PV transition services for more than 18 professional and financial ties of PV Brewing’s operations. Exhibit A at 7–8. months, on the basis that it may take PV Brewing and its operational team. Based The Hawaii AG is incorrect. The Brewing time to acquire knowledgeable on that evaluation, the United States provision of transition services will not local employees, see Exhibit A at 8. As concluded that PV Brewing is capable, give ABI the ability to influence PV noted above, however, the proposed willing, and incentivized to compete Brewing’s operations because the Final Judgment puts in place effectively and will preserve services are narrow in scope and mechanisms by which PV Brewing can competition in the state of Hawaii, and temporary. The provision of transition hire personnel formerly employed by approved PV Brewing as the purchaser. services helps ensure that the acquirer Kona Hawaii, and the local leadership Further, the price offered by PV seamlessly steps into the helm of Kona team of Kona Hawaii has already joined Brewing for the divestiture assets, Hawaii to compete with ABI. PV Brewing. which Maui Brewing characterizes as ‘‘quite low,’’ Exhibit B at 2, does not Transition services provisions, such E. The United States Rigorously and cast doubt on PV Brewing’s ability or as the one included in the proposed Independently Assessed the Approved intentions to compete. It is common for Final Judgment, are commonplace in Acquirer divestiture assets to be sold at below- connection with divestitures and serve Finally, Maui Brewing contends that market prices, because the ‘‘divesting an important role in ensuring the the process by which ABI selected PV firm is being forced to dispose of assets success of a divestiture. See, e.g., Final Brewing as the proposed acquirer was within a limited period. Potential Judgment at 12–13, United States v. ‘‘unfairly administered,’’ see Exhibit B purchasers know this.’’ DOJ Merger United Technologies Corp., No. 1:18-cv- at 1, and believes it instead should be Remedies Manual at 25. Moreover, 02279 (D.D.C. 2018) (requiring approved as the acquirer of the considerations other than price, such as Defendants to supply transition services divestiture assets. In support of that the ability to close quickly and the such as facility management and contention, Maui Brewing states that PV likelihood of receiving approval from upkeep, government compliance, and Brewing offered a price ‘‘below fair the United States, may result in the accounting and finance, at the market value’’; Maui Brewing is more selection of a proposed acquirer who purchaser’s option); see also qualified than PV Brewing to be the offers less than the highest price. In Competitive Impact Statement at 17, acquirer; and ABI selected PV Brewing some cases, a low purchase price may United States v. Bayer AG, No. 1:18–cv– as the proposed acquirer due to its raise concerns as to whether a proposed 01241 (D.D.C. 2018) (noting that ‘‘clear ties to ABI.’’ Exhibit B at 1–3 purchaser will be a successful transition services agreements are (internal citations omitted). competitor. See, e.g., United States v. ‘‘aimed at ensuring that the [divestiture] The goal of a divestiture is to ‘‘ensure Aetna, Inc., 240 F. Supp. 3d 1, 72 assets are handed off in a seamless and that the purchaser possesses both the (D.D.C. 2017) (citing an ‘‘extremely low efficient manner . . . [and that means and the incentive to maintain the purchase price’’ as evidence that the divestiture buyer] can continue to serve level of premerger competition in the divestiture buyer was not likely to be customers immediately upon market of concern.’’ DOJ Merger able to replace the competition lost by completion of the divestitures.’’). Remedies Manual at 6. The United the merger). Transition services agreements, such States is not ‘‘to pick winners and The key inquiry is whether ‘‘the as the one contemplated by the losers’’ or to ‘‘protect or favor particular purchase price and other evidence proposed Final Judgment, are competitors.’’ Id. at 4–5. In vetting a indicate that the purchaser is unable or purposefully limited in scope. For potential acquirer, the United States’ unwilling to compete in the relevant example, the transition services ‘‘appropriate remedial goal is to ensure market.’’ See DOJ Merger Remedies provision here requires ABI to provide that the selected purchaser will Manual at 25. In its investigation here, the acquirer with transition services for effectively preserve competition the United States did not find evidence finance and accounting services, human according to the requirements in the that PV Brewing was unwilling or resources services, supply and consent decree, not that [the acquirer] unable to compete in the relevant procurement services, brewpub will necessarily be the best possible market, nor has Maui Brewing pointed consulting, on-island merchandising, competitor.’’ Id. at 24. The United States to any such evidence. brewing engineering, and information has done so here. Lastly, Maui Brewing’s concern about technology services and support—only In accordance with Paragraph IV.A. of PV Brewing’s ‘‘clear ties to ABI’’ ignores if the acquirer chooses. See Dkt. No. 2– the proposed Final Judgment, the the fact that the divestiture will not only 1, Exhibit A (Proposed Final Judgment, United States has found PV Brewing to preserve the competition likely to be Para. IV.P.). be an appropriate acquirer. Paragraph lost by the transaction, but will enhance

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Kona Hawaii’s independence from ABI. [That the] Divestiture Assets can and will Æ We expect PV to be reliant on ABI As noted previously, before this be used by Acquirer as part of a viable, as long as PV chooses to sell bottled transaction, ABI held an approximate ongoing business of the brewing, developing, beer; 31% stake in CBA and, by extension, in packaging, importing, distributing, Æ We expect PV to be reliant on ABI marketing, promoting, and selling of Beer in Kona Hawaii. ABI also had the right to the State of Hawaii, and that the divestiture if the new brewery is not able to appoint two of the eight seats on CBA’s to Acquirer will remedy the competitive produce PV’s entire requirements of PV Board of Directors. See Complaint ¶ 13. harm alleged in the Complaint.1 Kona Brew cans and draught beer of Following the divestiture, ABI will no sufficient quality and quantity after 5 The CIS provides additional insight longer own any stake in Kona Hawaii. years. on the intent of the divestiture remedy V. Conclusion as follows: Discussion After careful consideration of the The divestiture required by the proposed Entanglement No. 1: The Common public comments, the United States Final Judgment will remedy the loss of Product continues to believe that the proposed competition alleged in the Complaint by Post divestiture, PV and ABI will each Final Judgment provides an effective establishing an independent and economically viable competitor in the market be parts of a whole and intricately and appropriate remedy for the antitrust for beer in the [S]tate of Hawaii.2 (Emphasis intertwined with the other. The violation alleged in the Complaint, and added.) ‘‘whole’’ is the universe of Kona Brew is therefore in the public interest. The products where ideally, ABI and PV will United States will move this Court to Respectfully, we are concerned that be selling the same product—Kona Brew enter the Final Judgment after the the PFJ does not meet the ‘‘public beer—as follows: comments and this response are interest’’ standard. While the PFJ published as required by 15 U.S.C. contemplates PV, a newly-formed (i) Kona Brew products are to be brewed 16(d). entity, owning the divestiture assets, and packaged in different locations: ongoing entanglements between ABI a. PV Kona Brew being brewed and Dated: March 17, 2021 and PV raise concerns that: (i) The packaged in Hawaii; and Respectfully Submitted, divestiture remedy will not establish PV b. ABI Kona Brew being brewed and FOR PLAINTIFF UNITED STATES OF to be truly independent of ABI; nor (ii) packaged on the U.S. mainland; and AMERICA establish PV to be able to effectively (ii) Kona Brew products are to be sold in different locations: lllllllllllllllllll /s/ compete with ABI in Hawaii. a. PV Kona Brew will be sold in Hawaii; Jill C. Maguire (DC#979595) We summarize our concerns as and follows: U.S. Department of Justice, Antitrust • b. ABI Kona Brew will be sold outside of Division, Assistant Chief, Healthcare & PV and ABI will be intertwined as Hawaii throughout the rest of the world.4 they both will be selling the same Consumer Products Section, 450 Fifth Street ABI Kona Brew and PV Kona Brew NW, Suite 4100, Washington, DC 20530, Tel: branded product in their respective (202) 598–8805, Fax: (202) 307–5802, Email: sales territories. are both tied to a common ‘‘story’’ of the [email protected]. • PV’s entanglement with and beer’s origins in Hawaii and the reliance on ABI’s wholly-owned advertising and lifestyle niche reflected Exhibit A distributor (‘‘WOD’’) may well mean in the marketing of the beer, e.g., the Tunney Act Comment of the Attorney that ABI will have pricing control and marketing of the products as ‘‘Liquid General of Hawaii on the Proposed Final authority over the price-to-retailer (PTR) Aloha’’ and other Hawaii-themed Judgment Filed in United States of America of PV Kona Brew which could foster: campaigns. It would not make sense for v. Anheuser-Busch InBev SA/NV, Et Al. Æ ABI’s price leadership and Molson ABI to disavow the Hawaii-connection Civil Action No. 4:20–cv–01282 Coors’s willingness to follow ABI’s nor for PV to now claim a non-Hawaii Definitions announced price increases in Hawaii; origin. and Since Defendants and PV are selling The following terms are used in this Æ Anticompetitive pricing of the PTR the same products in concept as well as comment: of PV Kona Brew in comparison to other in taste and marketing, each will be • PV—means PV Brewing Partners, beers sold by ABI in Hawaii.3 intricately intertwined with the other LLC, the acquirer of the divestiture • PV’s entanglement with and which may call for each to be moving assets, and includes Kona Brewing LLC. reliance on ABI for the performance of with the other in a highly coordinated • PV Kona Brew—means Kona Brew critical business functions through the manner. products believed to be sold by PV in Transition Services Agreement will give Entanglement No. 2: The Role of ABI’s Hawaii. ABI influence and if not a measure of Wholly Owned Distributor • ABI Kona Brew—means Kona Brew control over these business functions. products made by ABI and sold outside • By reason of the non-exclusive Per the PFJ, at the option of PV, ABI’s of Hawaii. supply contract, PV will be entangled WOD in Hawaii is required to enter into • ABI—means Defendants Anheuser- with ABI for production, packaging and a distribution agreement with PV.5 Busch InBev SA/NV), Anheuser-Busch delivery of PV Kona Brew to meet PV’s Thus, PV will logistically continue with Companies, LLC, and Craft Brew needs: the pre-transaction arrangement that Alliance, Inc. (‘‘CBA’’), unless otherwise Æ We expect PV to be close to 100% CBA had where the WOD distributed all specifically noted. reliant on ABI as its contract brewer of CBA’s Kona Brew products in • CIS—means the Competitive Impact until the new brewery is fully Hawaii.6 This WOD has distributed Statement. operational; • PFJ—means the proposed Final 4 This ideal world is not what will occur because Judgment. 1 PFJ at ¶ III.D. at p. 8. initially, portions of PV Kona Brew will be 2 CIS at p. 11. produced and packaged on the U.S. mainland and Introduction 3 The PTR is the price at which the beer is sold delivered to Hawaii for distribution by ABI’s WOD by the distributor to retailers who set the retail price to Hawaii retailers. The PFJ provides that the intent of the for customers. In this matter, the distributor is ABI’s 5 See, PFJ at ¶ IV(O) on p. 13. divestiture remedy is: wholly-owned distributor. 6 CIS at p. 16.

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other ABI beers in Hawaii in the past.7 States and owner of many brands sold in But with the divestiture remedy, We expect the WOD to continue to Hawaii such as Miller Lite, Coors Light, and through its control and authority over distribute other ABI beers post- Blue Moon, has followed ABI’s announced the WOD and the PTR of PV Kona Brew, divestiture. price increases in Hawaii to a significant ABI will have the ability to prevent PV Since the WOD is wholly-owned by degree. Molson Coors’s willingness to follow ABI’s announced price increases is Kona Brew from competing against ABI, we are concerned that ABI will constrained, however, by the diversion of other beers sold by ABI and have the control and authority over the sales to other competitors who are seeking to substantially lessen competition PTR of PV Kona Brew. Such control by gain share, including CBA and its Kona between PV and ABI to benefit the sales ABI over the PTR is strongly suggested brand. of ABI’s other beers. Consider the by ¶ 29 of the Complaint which alleges 31. By acquiring CBA, ABI would gain following: that ABI has a ‘‘price leadership’’ control over Kona’s pricing and would likely • ABI has positioned one of its beers strategy, that ABI seeks to generate increase Kona’s price, thereby eliminating a in the premium segment—Michelob ‘‘industry-wide price increases,’’ that significant constraint on Molson Coors’s Ultra Pure Gold. ABI has the motivation ABI implements this strategy by pre- willingness to follow ABI’s announced price increases in Hawaii. By reducing Kona’s to suppress competition from PV Kona announcing its own price increases and constraint on Molson Coors’s willingness to Brew to protect its own premium beer purposefully making those price increase prices, the acquisition likely in Hawaii and could cause the PTR of increases, and that ABI tracks its increases the ability of ABI to facilitate price PV Kona Brew to be above the PTR of primary competitors: coordination, thereby resulting in higher Michelob Ultra Pure Gold. 29. Historically, ABI has employed a ‘‘price prices for beer sold in Hawaii. For this • ABI, through its control and leadership’’ strategy throughout the United reason, ABI’s acquisition of CBA likely authority, could increase the PTR of PV States, including in Hawaii. According to this would substantially lessen competition in Kona Brew to remove a constraint on strategy, ABI, with the largest beer sales in Hawaii in violation of Section 7 of the ABI’s ability to raise prices in other Clayton Act. (Emphasis added.) the United States and Hawaii, seeks to segments. The Complaint contains an generate industry-wide price increases by The divestiture remedy does not implicit acknowledgement that the level pre-announcing its own price increases and remove nor lessen the prospect of a of PV Kona Brew’s price could constrain purposefully making those price increases violation of Section 7 of the Clayton transparent to the market so its primary ABI’s ability to raise its beer prices not competitors will follow its lead. These Act. Due to ABI’s control and authority only in the premium segment but also announced price increases, which can vary over the PTR, ABI will still possess the in core-plus and other beer segments: ability to remove any pricing constraint by geography because of different . . . [T]he competition provided by CBA’s competitive conditions, typically cover a associated with the PTR of PV Kona Kona in the premium segment [has served] as broad range of beer brands and packages (e.g., Brew and thereby pave the way for an important constraint on the ability of ABI container and size). After announcing price Molson Coors to follow any price to raise its beer prices not only in the increases, ABI tracks the degree to which its increases announced by ABI in Hawaii. premium segment, but also in core-plus and primary competitors match its price other beer segments.10 (Emphasis added.) increases. Depending on the competitive Problem No. 2: Anticompetitive Pricing response, ABI will either maintain, adjust, or of PV Kona Brew Versus Other Beers In addition, ABI would likely prevent rescind an announced price increase. Sold by ABI in Hawaii PV Kona Brew from being priced lower to compete against ABI’s value, core, or The allegations do not mention the The entanglement between PV and core-plus beers to avoid eroding sales in authority of the WOD to set the PTR or ABI’s WOD may negatively impact price Hawaii of ABI’s beers in these segments. the WOD’s discretion on competition between PV Kona Brew and ABI and PV may assert that a implementation of the price leadership other ABI beers sold in Hawaii. premium beer such as PV Kona Brew strategy. In fact, the allegations read as ABI groups beers into five segments would not be priced to compete with if the WOD does not have any role or and sells beers in each segment in other beers sold by ABI in Hawaii involvement with ABI’s industry-wide Hawaii: price increases, and in particular, as to 1. Value (Busch Light and Natural because the other ABI beers appeal to price increases applicable to Hawaii. Light); different tastes and customers. That We are therefore concerned that the 2. Core (Bud Light and Budweiser); said, the pricing is under the control of entanglement of PV with ABI’s WOD 3. Core-plus (Michelob Ultra and Bud ABI. Also, consumers are not strictly will pose at least two (2) Light Lime); prohibited from buying other than their anticompetitive pricing problems: 4. Premium (Michelob Ultra Pure favorite beer, especially if another beer Gold); and is a premium beer sold at a competitive Problem No. 1: Facilitating ABI’s Price price. As noted earlier, the Complaint Leadership viz. Molson Coors 5. Super-premium (Stella Artois and Golden Road).8 acknowledges that price can cause The CIS at p. 10 describes a concern Importantly, as noted earlier, the consumers switch beers or ‘‘trade up’’ or that through the proposed transaction, WOD has distributed other ABI beers in ‘‘trade down’’ in response to changes in ‘‘ABI would gain control over Kona’s Hawaii, and we expect it will continue price. pricing and would likely increase to do so post-divestiture. * * * * * Kona’s price, thereby eliminating a We are not aware of any prohibition While PV has the option to arrange for significant constraint on Molson Coors’s that would prevent PV from seeking to a new distributor, pursuit of this option willingness to follow ABI’s announced have PV Kona Brew priced sufficiently will likely be a daunting task that could price increases in Hawaii.’’ The low by a distributor independent of ABI Complaint describes the dynamics as to effectively compete with ABI’s beers consumers to switch beers or ‘‘trade up’’ or ‘‘trade follows: in other segments, such as: (i) The Value down’’ between segments: 30. For many years, Molson Coors Beverage segment; (ii) the Core segment; or (iii) Consumers may ‘‘trade up’’ or ‘‘trade down’’ 9 between segments in response to changes in price. Company (‘‘Molson Coors’’), the brewer with the Core-plus segment. For example, as the prices of core-plus brands the second-largest beer sales in the United approach the prices of premium brands, consumers 8 CIS at p.4. are increasingly willing to ‘‘trade up’’ from core- 7 See, e.g., https://www.yellowpages.com/aiea-hi/ 9 The Complaint at ¶ 16 acknowledges the plus brands to premium brands. mip/anheuser-busch-sales-of-hawaii-inc-11728049. importance of changes in price in prompting 10 Complaint at ¶ 16.

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impair distribution of PV Kona Brew. As Brewing competing effectively in as far back as 2018 if not earlier.17 The CBA has noted in the past, changing the Hawaii.’’ 14 exact timing of when the brewery will distribution network is a challenging Per the CIS: be certified as being fully operational is task: • ‘‘Any transition Services agreement unknown. But we do know that may last for a period of up to 18 We have a continuing relationship with Defendants will be deemed to have months;’’ complied with their PFJ obligation on Anheuser-Busch, LLC and the current • distribution network that would be difficult The transition services agreement the new brewery if: to replace. Most of our products are sold and contemplates ‘‘employees of (i) The new brewery achieves an distributed through A–B’s distribution Defendants’’ being ‘‘tasked with average production capacity of 1,500 network. If the A–B Distributor Agreement supporting the transition services barrels of saleable Beer each calendar were terminated, we would be faced with a agreement;’’ and week for three consecutive calendar • number of operational tasks, including ‘‘Any transition services agreement weeks within 180 calendar days after establishing and maintaining direct contracts must be time-limited to incentivize [PV] the Court’s entry of the Stipulation and with the existing wholesaler network or to become a fully independent Order; 18 and negotiating agreements with replacement competitor of [ABI].’’ 15 wholesalers on an individual basis, and (ii) If Defendants warrant to PV that But consider that a complete the new brewery is operational and enhancing our credit evaluation, billing and termination of services via the accounts receivable processes. Such an without material defect.19 undertaking would require significant effort Transition Services Agreement will If these metrics are not met, then and substantial time to complete, during likely occur only if PV has acquired Defendants will be required to pay which the distribution of our products could employees sufficient and capable of $25,000 per day until they achieve be impaired. We are dependent on our substantially performing the myriad compliance per the PFJ.20 wholesalers for the sale of our products.11 functions without the assistance of At the moment, until the brewery is (Emphasis added.) Defendants. While there is an intent to fully operational, there is uncertainty as Furthermore, the challenge could be limit the term of the agreement to 18 to the true capability of the new brewery far greater because we are not aware of months, we are not aware of an absolute to produce the entire product spectrum any publicly available information prohibition on an amendment to extend and quantity of PV Kona Brew cans and showing that the principals of PV have: the term beyond 18 months to address draught beer. We therefore expect PV (i) Experience in running a Hawaii- any employment shortcomings will remain reliant on ABI for the based hands-on beer brewing operation; experienced by PV. We also note that production, packaging, and delivery of (ii) experience with doing business in the CIS contemplates changes and beer sufficient to meet PV’s immediate Hawaii; or (iii) experience with provides on p. 18 that ‘‘to the extent PV needs via the non-exclusive supply servicing all the retail connections that Brewing or Defendants seek to amend or contract with ABI. purchased Kona Brew beer from the modify any transition services This entanglement of PV with ABI WOD. agreement, the United States must through the non-exclusive supply approve any changes.’’ Thus, we remain concerned that the contract should provide the products Thus, we remain concerned that PV needed by PV and promote consistency entanglement of PV with ABI’s WOD will remain entangled with ABI for poses anticompetitive pricing problems. between PV Kona Brew and ABI Kona critical services beyond 18 months. Brew until the new brewery is fully Entanglement No. 3: ABI’s Provisioning Entanglement No. 4: Contract Brewing operational. The supply agreement may of Transition Services. of PV Kona Brew by ABI be for a period of five (5) years as contemplated by the PFJ—an initial Per the PFJ, at the option of PV, Per the PFJ, at the option of PV, three year period plus two one-year Defendants are required to enter into a Defendants are required to enter into a periods. contract to provide transition services to non-exclusive supply contract for the PV.12 PV will be entangled with and We remain concerned, however, that production, packaging, and delivery of PV’s entanglement with ABI via the reliant upon ABI for the performance of 16 beer. non-exclusive supply contract will critical business functions through the We understand the logic of the continue beyond five (5) years for three Transition Services Agreement which contract brewing arrangement given: (i) reasons. First, it is unclear whether and will give ABI influence if not a measure The history of ABI brewing Kona Brew to what extent the new brewery will be of control over these functions. These beer for years due to the absence of a able to brew all the canned beer and functions are: fully operational brewery in Hawaii • Finance and accounting services; draught beer needed by PV. capable of handling CBA’s production Second, we are not aware of an • Human resources services; requirements; and (ii) the fact that ABI absolute prohibition on an amendment • Supply and procurement services; and PV will both selling a common • to extend the term of the non-exclusive Brewpub consulting; product such that the quality of PV supply contract beyond five (5) years • On-island merchandising; Kona Brew must be commensurate with months to address production • Brewing engineering; and ABI Kona Brew. PV will be acquiring a new brewery • Information technology services 17 The CBA 2017 10–K report at p. 23 stated that and support.13 that has been under construction since ‘‘In 2016, we held a groundbreaking ceremony for The CIS describes the brewing a new brewery near our existing brewery and pub 14 CIS at p. 17. in Kona. The new brewery, which is being built engineering function as ‘‘particularly 15 CIS at pp. 17 & 18. Interestingly, the CIS does with sustainability in mind, is scheduled to go important to PV Brewing to ensure that not express the sentiment that PV be incentivized online in the first quarter of 2019.’’ The CBA 2018 it can run the new brewery and produce to become a ‘‘fully independent competitor’’ with 10–K report at p. 7 stated that that the brewery was saleable Beer—which is critical to PV respect to the distributor agreement with the WOD scheduled to go online in the latter half of 2019. nor the non-exclusive supply contract with 18 It is not clear what ‘‘1,500 barrels of saleable Defendants discussed later. beer’’ represents in terms of PV’s production 11 See, Risk Factors’’ section of CBA’s 2018 10– 16 See, PFJ at ¶ IV(N) on pp. 12–13. The requirements nor clear as to the extent 1,500 barrels K at pp. 16–17. movement of PV Kona Brew from the mainland will free PV from ABI’s contract brewing role. 12 See, PFJ at ¶ IV(P) on pp. 13–14. brewery to the WOD appears to be a continuous 19 CIS at p. 13 referring to PFJ at ¶ IV.B and J. 13 CIS at p. 17. flow with title to the beer remaining with ABI. 20 CIS at p. 13.

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shortcomings experienced by PV. Here, non-ABI brewing option.22 We are Æ ABI’s price leadership and Molson we note that the CIS contemplates concerned that this entanglement Coors’s willingness to follow ABI’s changes and provides on p. 16 that ‘‘to between PV and ABI via the non- announced price increases in Hawaii; the extent PV Brewing or Defendants exclusive supply contract with ABI will and seek to amend or modify any supply continue beyond 5 years as long as PV Æ Anticompetitive pricing of the PTR agreement, the United States must chooses to sell bottled beer and/or if the of PV Kona Brew in comparison to other approve any changes.’’ new brewery is not able to produce PV’s beers sold by ABI in Hawaii. Third, PV does not have the facilities entire requirements of PV Kona Brew • PV’s entanglement with and in Hawaii to brew bottled beer.21 PV cans and draught beer of sufficient reliance on ABI for the performance of 23 will therefore be reliant on the non- quality and quantity after 5 years. critical business functions through the exclusive supply contract with ABI as Summary Transition Services Agreement will give long as PV decides to sell PV Kona Brew ABI influence and if not a measure of Based on the above, we are concerned in bottles. control over these business functions. that the PFJ does not meet the ‘‘public • By reason of the non-exclusive Admittedly, PV will have the option interest’’ standard. Ongoing supply contract, PV will be entangled to contract with other brewers to brew entanglements between ABI and PV with ABI for production, packaging and its PV Kona Brew in bottles as well as raise concerns that the divestiture in cans and draught. But the fact that PV delivery of PV Kona Brew: remedy will not establish PV to be: (i) Æ may pursue a non-ABI brewing option Truly independent of ABI; and (ii) able We expect PV to be close to 100% does not mean the option is viable due to effectively compete with ABI in reliant on ABI as its contract brewer to: (i) The intricacies of switching to a Hawaii: until the new brewery is fully new brewery; (ii) the need to ensure • PV and ABI will be intertwined as operational; quality control and consistency between they both will be selling the same Æ We expect PV to be reliant on ABI the multiple PV Kona Brew products branded product in their respective as long as PV chooses to sell bottled and ABI Kona Brew products; and (iii) sales territories. beer; and the need to ensure sufficient production • PV’s entanglement with and Æ We expect PV to be reliant on ABI quantities. That ‘‘Defendants are already reliance on ABI’s wholly-owned if the new brewery is not able to familiar with the recipes and brewing distributor may well mean that ABI will produce PV’s entire requirements of PV processes for Kona brands’’ and have have pricing control and authority over Kona Brew cans and draught beer of the brewing capacity provides much the price-to-retailer of PV Kona Brew sufficient quality and quantity after 5 comfort if not inertia against pursuing a which could foster: years.

EXHIBITB

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7 December 2020 Re: Testimony; United States of Alliance (CBA) assets in Hawaii to PV America, Plaintiff, v. Anheuser-Busch Brewing of Kansas as we feel that the Robert A. Lepore, Chief, INBEV SA/NV, Anheuser-Busch divestiture process was unfairly Transportation, Energy, and Agriculture Companies, LLC, and Craft Brew administered, and a buyer was selected Section Antitrust Division, Alliance, Inc. for their clear ties to Anheuser Busch Department of Justice, 450 5th Street Aloha Mr. Lepore, InBev (ABI) and at a price substantially NW, Suite 8000, Washington, DC I would like to provide comment on below ‘‘fair market value’’. In the 20530 the proposed sale of the Craft Brewers currently proposed structure, there is

21 CIS at p. 15. comingled with cans and bottles produced and to clearly and conspicuously inform consumers of 22 CIS at p. 15. packaged for PV by ABI on the U.S. mainland under where the particular PV Kona Brew was brewed. 23 We also remain concerned over the potential contract; and/or (ii) mainland-brewed beer being The notice provided by ABI on packaging used to customer confusion that could be caused by: (i) poured in bars and restaurants in Hawaii without date has not been as clear and conspicuous to ‘‘locally-made’’ PV Kona Brew cans being any signage. One solution is packaging and notice inform consumers of where the beer was brewed.

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simply no separation in the short or 30,000 square foot facility is simply not with a separate successful career long term from ABI. capable of producing 100,000 barrels a decides to start a brewery in Hawai1i For a bit of background our company year. There are many ways to evaluate with no plans to move here to operate is 100% locally owned in Hawai1i and this. By comparison we operate an it, begins his career as a brewer with a is a small closely held family business. 82,000 facility approximately 65,000 of brand like Kona. Furthermore, that the We began brewing in 2005 with the which is dedicated to brewing and have assets are sold at a price that could only simple idea that or State needed an a true 100,000-barrel capacity facility. be described as a ‘‘sweetheart deal’’ authentic craft beer that was truly made The shipping and logistics challenges in awarded to former ABI company men to in Hawai1i. At the time there were very Hawai1i alone do not allow for this to be ensure long-term influence over the few brewing operations and Kona was achieved. I have done a comprehensive Kona brand in Hawai1i and across the the only widely sold offering, and even analysis on all the publicly available world. then was not made in Hawai1i. Even data for the new brewery in Kona and I then begin to look at the term back then, all the packaged product suffice to say it is not nearly capable of ‘‘qualified buyer’’. It would seem to me (cans did not exist at the time) and brewing all of Kona’s beer for Hawai1i. that a company such as ours, with a much of the draft was being brewed on Their own marketing materials when dedicated, local, top-tier team operating the mainland, shipped to Hawai1i and looking to sell the Hawai1i assets state 4 restaurants and the largest brewing sold as supposedly ‘‘local’’ and being that the ‘‘new brewery will allow for the operation in the State offering more from Hawaii. We saw an opportunity to majority of its Hawaiian consumed money should at least be considered. bring authenticity and a sense of place products to be locally brewed’’. This by From an experience standpoint, no one to craft beer in Hawai1i and from that definition means that any ‘‘transitional in Hawai1i and no one outside of Hawai1i simple idea Maui Brewing Co. (MBC) brewing agreement’’ is not meant to be has more experience brewing in the was born. temporary and in fact be a long-term islands than we do. To say that it’s a Maui Brewing Co. is Hawai1i’s largest reliance and as soon as no one is challenge to brew in Hawai1i is an craft brewer, and brewery for that watching it is unlikely to believe PV understatement and we have proven our matter. No one brews as much beer in will attempt to brew 100% of the beer capabilities of brewing nearly 60,000 the State as we do. We have a 16-year in Hawai1i. Therefore, by allowing PV barrels of beer each year. I am also a history of brewing in the islands with Brewing (backed by a private equity founding member of the Hawaiian Craft volumes that far surpass those of our firm) to purchase Kona’s assets with a Brewers Guild, Vice-Chair of the competitors by at least 4-fold. We also former ABI executive with a full-time Brewers Association, and have been led operate 4 restaurant locations; two on position as President/Chief Operating more than a dozen legislative actions in Maui and two on Oahu. Our craft beer Officer of a larger grocer managing from Hawai1i making a profound impact on is synonymous with authenticity, afar, a brand that is owned in the rest the brewing community and access to quality, innovation and sense of place. of the world by ABI, selling beer brewed beer. Additionally, our restaurant We are local and every drop of beer by ABI, to an ABI Wholly Owned operations group has the capability to brewed to date has been brewed in Distributor (WOD). Where exactly is the handle additional locations. I believe Hawai1i. disconnect from ABI? our company is not only a qualified When we learned of the proposed I subsequently placed a direct and buyer, but the most qualified buyer due divestiture of the Kona brands in State, unsolicited Indication of Interest for a to our experience and capabilities. along with the sale of the new brewery significant premium over the PV It would seem that if the sale was and retail locations we were intrigued at Brewing offer for our company to meant to be a legitimate divestiture of the opportunity to combine the two acquire the Kona assets in Hawai1i. I was the Kona Brewing assets in Hawai1i, the brands into a truly authentic Hawai1i clear that this Indication of Interest (IOI) sale would have been awarded to a organization leveraging the strengths of could be swiftly converted to Letter of buyer exhibiting a history of brewing in both. Most importantly I saw a vision of Intent (LOI) and provide the basis for a Hawai1i at the annual volumes needed to two brands coming together for the Sale Agreement and close quickly to meet demand, willing to pay a higher betterment of Hawai1i and to finally meet to needs of all parties. Prior to this price, maximize shareholder value, has bring legitimacy to the Kona brands direct offer, I was a consultant on an existing restaurant operations in Hawai1i across the State, meaning that this offer that was nearly a 3X premium capable of operating the two Kona pubs, would then be truly brewed in Hawai1i. above what was ultimately paid. I and has a brewery with additional In my eyes this was something to be would think that the shareholders of capacity to handle it’s volume and celebrated and bringing the Kona brand CBA would have wanted their company augment the shortfall of the new Kona back to Hawai1i would be my honor. We to accept a qualified buyer and the facility to meet demand without long followed this transaction closely and highest bid. term reliance on ABI for brewing. Again, were part of one offer through another From an enterprise value viewpoint, it is inconceivable that PV Brewing can group. This offer was not accepted and the purchase price awarded to PV meet the Hawai1i demand for the various was likely ignored. The reason I say Brewing seems quite low. What was beers and packaging configurations ‘ignored’ is that when we learned to advertised as a 24MM+ new brewery, without long-term reliance on ABI. whom the sale was awarded, we were with 2 successful restaurants grossing Without true capabilities to brew 100% all shocked at the extremely low price north of 15MM, on top of over a million of the KBC demand in Hawai1i, ABI and only I was not surprised by the fact case equivalents of beer sold in State, WOD in Hawai1i will simply be ordering that a former ABI executive was going could certainly not be sold for 16MM as and receiving direct containers of KBC to be purchasing the assets of Kona. I a legitimate enterprise value. To me, brand beer from ABI facilities on the truly did not believe that the and many others, it seems this process mainland, these containers would never Department of Justice (DOJ) would was not conducted fairly and there even touch the loading dock at ‘‘PV approve this structure as a buyer as it clearly were motives at play to keep Brewing’’ on the Big Island. With an does not in any way fully disconnect Kona as much under ABI influence as integration of Maui Brewing Co. and ABI from Kona. possible. A reasonable person can see Kona Brewing Co. operating as two I look at the published information on this for what it is. It is unlikely to separate ‘‘partner’’ brands we would be the new brewing facility in Kona. A believe that a former ABI executive, 100% self-sufficient after a short

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transition brewing agreement. Between Enforcement Administration, Attn: hearing on the application on or before the two facilities MBC and KBC, we Hearing Clerk/OALJ, 8701 Morrissette April 23, 2021. would have capacity, redundancy and Drive, Springfield, Virginia 22152; and ADDRESSES: Written comments should true economies of scale to execute this (2) Drug Enforcement Administration, be sent to: Drug Enforcement plan completely free from ABI Attn: DEA Federal Register Administration, Attention: DEA Federal influence. Representative/DPW, 8701 Morrissette Register Representative/DPW, 8701 I have prepared a spreadsheet with Drive, Springfield, Virginia 22152. Morrissette Drive, Springfield, Virginia data from my analysis of the publicly SUPPLEMENTARY INFORMATION: In 22152. All requests for a hearing must available information from the new accordance with 21 CFR 1301.34(a), this be sent to: Drug Enforcement brewery construction along with is notice that on March 1, 2021, Administration, Attn: Administrator, valuation metrics for the company. I can Shertech Laboratories, LLC, 1185 Woods 8701 Morrissette Drive, Springfield, share this at the appropriate time in our Chapel Road, Duncan, South Carolina Virginia 22152. All requests for a discussion. 29334, applied to be registered as an hearing should also be sent to: (1) Drug In closing we feel that the divestiture importer of the following basic class(es) Enforcement Administration, Attn: process was unfairly administered, and of controlled substance(s): Hearing Clerk/OALJ, 8701 Morrissette a buyer was selected for their clear ties Drive, Springfield, Virginia 22152; and to ABI and the desire to maintain Controlled substance Drug Schedule (2) Drug Enforcement Administration, influence. We are still an interested code Attn: DEA Federal Register party and would like the opportunity to Cocaine ...... 9041 II Representative/DPW, 8701 Morrissette be considered as a buyer for the Kona I I Drive, Springfield, Virginia 22152. Brewing assets within Hawai1i. The company plans to import SUPPLEMENTARY INFORMATION: In Sincerely, synthetic derivatives of the listed accordance with 21 CFR 1301.34(a), this /s/ controlled substance in bulk form to is notice that on February 26, 2021, Garrett W. Marrero conduct clinical trials. No other activity Medi-Physics Inc dba GE Healthcare, CEO, Founder, 3350 North Ridge Avenue, Arlington Maui Brewing Co. for this drug code is authorized for this [FR Doc. 2021–05988 Filed 3–23–21; 8:45 am] registration. Heights, Illinois 60004–1412, applied to be registered as an importer of the BILLING CODE 4410–11–P Approval of permit applications will occur only when the registrant’s following basic class(es) of controlled business activity is consistent with what substance(s): DEPARTMENT OF JUSTICE is authorized under 21 U.S.C. 952(a)(2). Authorization will not extend to the Drug Controlled substance code Schedule Drug Enforcement Administration import of Food and Drug [Docket No. DEA–813] Administration-approved or non- Ecgonine ...... 9180 II approved finished dosage forms for Importer of Controlled Substances commercial sale. The company plans to import Application: Shertech Laboratories, William T. McDermott, derivatives of the controlled substance LLC Assistant Administrator. to be used for the manufacture a diagnostic product and reference AGENCY: Drug Enforcement [FR Doc. 2021–06031 Filed 3–23–21; 8:45 am] Administration, Justice. standards. No other activity for this drug BILLING CODE 4410–09–P code is authorized for this registration. ACTION: Notice of application. Approval of permit applications will SUMMARY: Shertech Laboratories, LLC DEPARTMENT OF JUSTICE occur only when the registrant’s has applied to be registered as an business activity is consistent with what importer of basic class(es) of controlled Drug Enforcement Administration is authorized under 21 U.S.C. 952(a)(2). substance(s). Refer to Supplemental Authorization will not extend to the Information listed below for further [Docket No. DEA–812] import of Food and Drug Administration-approved or non- drug information. Importer of Controlled Substances DATES: Registered bulk manufacturers of approved finished dosage forms for Application: Medi-Physics Inc dba GE commercial sale. the affected basic class(es), and Healthcare applicants therefore, may file written William T. McDermott, comments on or objections to the AGENCY: Drug Enforcement Assistant Administrator. issuance of the proposed registration on Administration, Justice. [FR Doc. 2021–06030 Filed 3–23–21; 8:45 am] or before April 23, 2021. Such persons ACTION : Notice of application. BILLING CODE 4410–09–P may also file a written request for a hearing on the application on or before SUMMARY: Medi-Physics Inc dba GE April 23, 2021. Healthcare has applied to be registered DEPARTMENT OF JUSTICE ADDRESSES: Written comments should as an importer of basic class(es) of be sent to: Drug Enforcement controlled substance(s). Refer to Drug Enforcement Administration Administration, Attention: DEA Federal Supplemental Information listed below Register Representative/DPW, 8701 for further drug information. [Docket No. DEA–811] Morrissette Drive, Springfield, Virginia DATES: Registered bulk manufacturers of 22152. All requests for a hearing must the affected basic class(es), and Importer of Controlled Substances be sent to: Drug Enforcement applicants therefore, may file written Application: Perkinelmer, Inc. Administration, Attn: Administrator, comments on or objections to the AGENCY: Drug Enforcement 8701 Morrissette Drive, Springfield, issuance of the proposed registration on Administration, Justice. Virginia 22152. All requests for a or before April 23, 2021. Such persons ACTION: Notice of application. hearing should also be sent to: (1) Drug may also file a written request for a

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