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The Federal Trade Commission is suing liquor distributor Southern Glazer’s Wine and Spirits for price discrimination, according to documents filed Dec. 12 in the U.S. District Court for the Central District of California.
Alcohol retailers have reportedly been offering bulk discounts and rebates to large national and regional retail chains since 2018, while withholding access to similar products from smaller independents.
According to an FTC press release, when sellers withhold volume discounts from independent businesses or agree to secret rebate schemes with preferred chains, they threaten the viability of independent businesses that give consumers choice in the marketplace. “The loss of choice and competition ultimately creates market conditions that can drive up prices for consumers.”
Southern Glazer’s said in a Dec. 12 statement that the suit was “misleading and legally flawed” and that it “strongly disputes the FTC’s claims.”
“Operating in a highly competitive alcohol distribution business, we offer customers different levels of discounts based on the costs we incur to sell different quantities and ensure that all discount levels are available to all eligible retailers, including chains and small businesses. “We do,” the statement said. says
The lawsuit alleges that the bulk discounts that Southern Glazer offers to customers of large retail chains are not justified by the cost savings the company has achieved. The lawsuit also alleges that Southern Glazer’s received “discount assistance” from its suppliers in exchange for more favorable prices.
According to the filing, the FTC is seeking a permanent injunction to prevent “further unlawful price discrimination by the South against these small, independent businesses.”
According to an FTC press release, the FTC alleges that Southern Glazer’s actions violated the Robinson-Patman Act, a law enacted in 1936 to prevent retailers from offering exclusive discounts to large corporate chains at the expense of small businesses.
According to the law firm Vinson & Elkins, it has been more than 20 years since the government filed a lawsuit alleging violations of the Robinson-Patman Act. But the FTC has stepped up its oversight efforts since President Joe Biden issued an executive order in July 2021 authorizing it to more thoroughly investigate potential violations of the law.
“The law states that businesses of all sizes must be able to compete on a level playing field,” Federal Trade Commission (FTC) Chair Lina Khan said in a press release. “Enforcers have ignored this mandate from Congress for decades, but the FTC’s action today will help protect fair competition, lower prices, and restore the rule of law.”
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