The Federal Trade Commission (FTC) is preparing a lawsuit against Southern Glazer’s Wine and Spirits, the nation’s largest alcohol distributor, over its pricing practices, according to a Politico report published yesterday.
The Federal Trade Commission began an antitrust investigation into the distributor last year, following regulators from the Alcohol and Tobacco Tax and Trade Bureau (TTB) and the Internal Revenue Service (IRS) raided the company’s offices in Union City, California. The case is reviewing how Southern Glazer’s may have favorably priced wine and liquor that advantaged larger retailers.
In recent weeks, FTC staff investigating Southern Glazer’s have recommended a lawsuit, according to the report. The FTC is rumored to be invoking the little-used 1936 Robinson-Patman Act, which attempts to rein in larger suppliers from influencing prices in order to undercut smaller retailers.
The decision to file is not final and the company is planning to meet with the agency’s five commissioners to argue against a lawsuit in the coming weeks. A case could be filed as soon as this month, read the report.
Most recently, the investigation put the FTC and national bev-alc retailer Total Wine & More at odds over the chain retailer’s participation in the government agency’s investigation before finalizing a settlement in December 2023.
The FTC, TTB and Department of Justice have been taking a closer look at the beverage-alcohol industry since 2021, after President Joe Biden issued an executive order urging for an examination of the state of competition in the U.S. economy. The potential lawsuit comes amid a series of other Biden administration lawsuits through the FTC that attempt to level the playing field for small retailers and reduce the impact of high food and beverage prices on consumers. Last January, the FTC opened an investigation into Coca-Cola and PepsiCo under the Robinson-Patman Act reviewing potential price discrimination within the soft drink market.
Bev-alc lawyers have speculated that the Southern Glazer’s case could have wide-reaching impact on the industry: If pricing practices are ruled discriminatory, the results could conflict with state regulations that allow discounts, quantity discounts, and cumulative quantity discounts.
Southern Glazer’s could be in the courtroom a lot in the future, as a judge announced last week that e-commerce bev-alc platform Provi’s lawsuit against Southern Glazer’s and RNDC could move forward. The lawsuit alleges that the bev-alc distributors illegally stifled competition and “tortiously interfered with Provi’s business.”
Southern Glazer’s did not return a request for comment.