FTC sues largest US wine and spirits distributor, saying it discriminates against smaller stores
The Federal Trade Commission complained the largest US distributor of wine and spirits Thursday, saying it illegally discriminates against small and independent businesses.
Southern Glazer’s Wine and Spirits does not give smaller stores access to discounts and rebates that larger chains receive, putting the smaller stores at a competitive disadvantage, the FTC alleged in the lawsuit it filed in California.
“When local businesses come under pressure because of unfair pricing practices that favor big chains, Americans see fewer choices and pay higher prices – and communities suffer,” FTC Chair Lina Khan said in a statement.
Miami-based Southern Glazer’s called the lawsuit “both misleading and legally flawed.”
“Alcohol distributors face numerous regulations that govern how they compete and can price and discount products, and Southern Glazer’s complies with these regulatory requirements,” the company said. “Southern Glazer’s strongly disputes the FTC’s allegations and will vigorously defend itself in this lawsuit.”
Southern Glazer’s is one of the largest privately held companies in the US, with revenues of $26 billion sale of wine and spirits to residential customers in 2023, the FTC said. It distributes one in three bottles of wine and spirits in the US and serves commercial customers such as Total Wine, Costco and Kroger.
The FTC’s case is based on the rarely used Robinson-Patman Act of 1936, which allows volume discounts but only if a seller can demonstrate that it can achieve actual cost efficiencies.
According to the FTC, Southern Glazer’s has repeatedly offered volume discounts and rebates to large buyers that are not justified by the difference in the cost of distributing products. In some cases, Southern Glazer’s has charged significantly higher prices for selling identical bottles of wine and spirits to independent retailers than to major chains just a few blocks away.
Southern Glazer’s also fails to inform smaller retailers about quantity discounts, rebates and other special offers available to larger chains, even when smaller stores could participate in the deals, the FTC alleged.
The FTC is petitioning the U.S. District Court for the Central District of California for an injunction against further price discrimination.
The fate of the lawsuit under the Trump administration is unclear. Two of the FTC’s five commissioners voted not to approve the lawsuit against Southern Glazer’s. President-elect Donald Trump recently selected one of the objecting commissioners, Andrew Fergusonto head the FTC.
In his dissent, Ferguson said the FTC had not brought a case under the Robinson-Patman Act in more than 25 years. While the law should be enforced, the FTC was unlikely to prevail in Southern Glazer’s case, he said.
Ferguson said that while it’s possible the FTC could find some cases where Southern Glazer’s price difference couldn’t be fully justified, only “substantial price discrimination” — not isolated situations — would violate the law.
“The evidence presented to me does not lead me to conclude that such extensive, unjustified discrimination occurred,” Ferguson wrote.