Pabst sues MillerCoors in bitter legal spat

US brewer Pabst has launched a lawsuit against rival MillerCoors claiming that it is trying to put it out of business by terminating a long-term contract brewing agreement, which it says would be the end for its flagship Pabst Blue Ribbon brand.

The Pabst-MillerCoors lawsuit opened in Milwaukee County Circuit Court yesterday.

At its centre is a 19-year contract brewing agreement for MillerCoors to make Pabst beer, including Pabst Blue Ribbon, Old Milwaukee, Natty Boh, and Lone Star. The agreement has been in place since 1999, but will come up for renewal in 2020, with provision for two possible five-year extensions.

MillerCoors has already stated that it has no interest in renewing the agreement, leading Pabst to accuse it of trying to squeeze out the competition by removing its brands from the market. 

Pabst says it has no other way to brew its brands other than through its partnership with MillerCoors, and is reliant on the production of 4 million to 4.5 million barrels annually.

The companies dispute how the provisional extensions should be negotiated. MillerCoors argues that it has sole discretion to determine whether it can continue brewing for Pabst, whereas Pabst says the companies must work “in good faith” to find a solution if Pabst wants to extend the agreement.

In an emailed statement, a spokesperson for Pabst said: “Since 1844, Pabst has been offering authentic, great tasting and affordable beers to all Americans.  From our flagship brand, Pabst Blue Ribbon, to our local legends, which include Rainier, Lone Star, Old Style, Stag, Stroh, Natty Boh, Olympia, and others – these iconic brands all have rich histories and deep roots in communities across the country. We are deeply disappointed that MillerCoors, the U.S. subsidiary of multinational brewing conglomerate Molson Coors, has willfully breached our 19-year agreement in an effort to stomp out the competition.

“Even though MillerCoors’ market power is much larger than Pabst’s, we will not allow this industry bully to push us around. We are confident that the court will see MillerCoors’ fabricated “capacity” concerns for what they are: a thinly veiled, bad faith attempt to unlawfully hurt a competitor.”

According to the Washington Post, Pabst says MillerCoors wouldn’t agree to an extension unless Pabst paid $45 per barrel — “a commercially devastating, near-triple price increase” from what it pays now.

At a March hearing in which MillerCoors tried to have the lawsuit dismissed, Pabst attorney Adam Paris said MillerCoors knew Pabst couldn’t accept that proposal “because it would have bankrupted us three times over.”

Pabst is seeking more than $400 million in damages and for MillerCoors to be ordered to honour its contract.

If Pabst lose their case, and can’t find another way to produce its brands, then it could spell the end of Pasbt Blue Ribbon, Old Milwaukee, and other brands.

The trial in Milwaukee County Circuit Court is scheduled through November 30.

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