US alcoholic beverages distributing giant Southern Glazer’s Wine & Spirits has challenged allegations from the national Federal Trade Commission of “unlawful price discrimination”.
The FTC announced yesterday (13 December) it had filed a lawsuit against Southern Glazer’s for “depriving” small and independent retailers of discounts and rebates, thus hitting competition.
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It claims the distributor has violated the Robinson-Patman Act under which it is “generally illegal” for sellers to charge “higher prices to disfavoured retailers that purchase similar products”.
“Southern engaged in anti-competitive and unlawful price discrimination,” the group said.
In response, Southern Glazer’s said it “strongly disputes the FTC’s allegations and will defend itself vigorously in this litigation”.
The FTC claimed Southern Glazer’s has “repeatedly discriminated in price between disfavoured independent purchasers” since 2018 to the advantage of major retailers including Kroger, Total Wine & More and Costco.
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By GlobalDataThe federal agency is looking to apply for an injunction to prevent Southern Glazer’s from allegedly discriminating against smaller businesses further.
“When Southern’s unlawful conduct is remedied, large corporate chains will face increased competition, which will safeguard continued choice which can create markets that lower prices for American consumers,” the group said in a statement.
Southern Glazer’s has described the Robinson-Patman Act as “a Depression-era federal antitrust law that has not been enforced in decades because of bipartisan concern that enforcement leads to higher prices for consumers”.
The company distributes for the world’s largest beverage-alcohol makers in 45 US states and Canada including Bacardi, Diageo, Pernod Ricard and Suntory Global Spirits.
“The FTC’s lawsuit takes issue with the use of volume discounts that Southern Glazer’s – and nearly every distributor of consumer products in the country – uses to lower customers’ costs and enable consumers to pay lower prices for the everyday goods they need,” Southern Glazer’s said.
“Dissents filed by Commissioners Holyoak and Ferguson articulate reasons why this enforcement action – aimed at an industry that is already heavily regulated by the states pursuant to the 21st Amendment of the US Constitution and by the U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau – is both misguided and legally flawed.
“Alcohol distributors face numerous regulations that dictate how they compete and can price and discount products, and Southern Glazer’s complies with those legal requirements.”
Opposing views at FTC
Dissenting statements were filed by FTC commissioners Andrew Ferguson and Melissa Holyoak.
Holyoak described the regulator’s lawsuit as “at odds with the plain text of the Robinson-Patman Act”. She added: “Not only does the Complaint fail to identify harm to competition or consumers, the proposed remedy would likely impede price competition and harm consumers.”
Ferguson said: “We ought to enforce the Act where it will serve the
broad public interest, and bring only those cases we are likely to win. This case checks neither box.”
In March 2023, the FTC reportedly launched a probe into Southern Glazer’s, according to Politico.
The distributor was investigated over practices around the sales and pricing of wine and spirits to retailers.
