The Federal Trade Commission (FTC) has filed a lawsuit against Southern Glazer’s Wine and Spirits, LLC, the largest distributor of wine and spirits in the United States. The FTC accuses the company of violating the Robinson-Patman Act by engaging in illegal price discrimination that harms small, independent businesses.
According to the FTC's complaint, Southern Glazer’s allegedly sold wine and spirits to small "mom and pop" businesses at significantly higher prices than those charged to large national chains. This practice is said to provide these chains with unfair advantages that are not justified by any real cost efficiencies.
The Robinson-Patman Act prohibits sellers from engaging in price discrimination that harms competition. The FTC aims to ensure that all businesses have equal access to discounts and rebates, which could lead to increased consumer choice and lower prices for consumers shopping at independent retailers.
FTC Chair Lina M. Khan stated, “When local businesses get squeezed because of unfair pricing practices that favor large chains, Americans see fewer choices and pay higher prices—and communities suffer.” She emphasized the importance of fair competition as mandated by law.
Since 2018, Southern Glazer’s has been accused of discriminating against independent purchasers like neighborhood grocery stores while favoring large chain purchasers such as Total Wine & More, Costco, and Kroger. In 2023 alone, Southern generated approximately $26 billion in revenues from its sales.
The FTC claims Southern’s discriminatory pricing is a deliberate strategy achieved through various mechanisms like quantity discounts and rebates offered exclusively to large buyers. These practices reportedly result in higher costs for consumers due to significant price differences for identical products sold within close proximity.
While volume discounts are allowed under the Robinson-Patman Act if they reflect real cost savings, the FTC argues that Southern's pricing practices exceed permissible limits without justification. The lawsuit seeks an injunction to prevent further unlawful price discrimination by Southern against small retailers.
The Commission voted 3-2 in favor of filing for a permanent injunction with Commissioners Andrew Ferguson and Melissa Holyoak dissenting. Commissioner Alvaro M. Bedoya issued a statement joined by Chair Lina M. Khan and Commissioner Rebecca Kelly Slaughter.
The FTC's action underscores its commitment to promoting competition and protecting consumers by ensuring fair market conditions where all businesses can compete equally.
