- The Federal Trade Commission (“FTC”) approved a final order requiring wine and spirits maker E. &. J. Gallo Winery (“Gallo”) to divest certain assets and remove certain other assets from its proposed asset purchase agreement with Constellation Brands, Inc. to resolve allegations that the agreement would harm competition for certain types of wines and spirits in violation of the FTC Act and the Clayton Act.
- The FTC’s complaint alleged that, because the two companies are the largest suppliers of low-priced sparkling wines, brandy, port, and sherry, as well as of grape-based high color concentrates, their proposed transaction would substantially lessen competition nationwide by eliminating head-to-head competition in these product categories.
- Under the terms of the final order, Gallo will divest its low-priced port and sherry brands to Precept Brands LLC and Constellation Brands will divest its low-priced brandy brand to Sazerac Company, Inc. and its concentrates business to Vie-Del Company. In addition, Constellation Brands will retain its sparkling wine brands and take all actions necessary to maintain their viability and competitiveness for four years. The final order also appoints a monitor to observe and report to the FTC on the companies’ compliance with the order.