On October 29, 2010, Constellation Brands, Inc. and GModelo Corporation (a subsidiary of Grupo Modelo, S.A.B. de C.V., Mexico’s leading brewer), announced a settlement with respect to a legal action GModelo brought against Constellation and affiliates in New York Supreme Court. The lawsuit, which was originally filed in federal court but later moved to state court, was lodged by Grupo Modelo last December and “sparked questions . . . about whether the alliance could be in jeopardy.” (See Modelo, Constellation Settle Dispute.) The issue among the two companies was the 2010 marketing and promotional budget for Constellation’s and GModelo’s joint venture, Crown Imports LLC (i.e. products such as Corona Extra). According to Grupo Modelo, Constellation officials on Crown’s board refused to accept the budget for the 2010 marketing financial plan advocated by Crown’s management despite expressing support in an earlier discussion and acknowledging that rejecting the proposal would impair the brand. Correspondingly, Grupo Modelo claimed Constellation officials were “deliberately obstructing Crown’s business in order to further their own selfish goals,” and Constellation responded, stating the suit lacked merit. (See Modelo, Constellation Settle Dispute.)
The terms of the settlement were not disclosed, but the two companies’ agreement reflects the promotional and marketing expenditures for 2010 and the remainder of the term for their joint-venture agreement (which is arranged to expire in 2016).
(Sources: Modelo, Constellation Settle Dispute; Constellation Brands and GModelo Reach Settlement;Constellation Brands and GModelo End Legal Dispute; and Constellation Brands and GModelo Announce Settlement of Legal Dispute.)
DISCLAIMER: This blog post is not intended as legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.
Comment