In a new lawsuit, the Federal Trade Commission accuses the largest U.S. wine and spirits distributor of illegal price discrimination that favored major chains including Costco, Hook and Total Wine & More – much better prices than those offered at small “mom and pop” shops like independent liquor stores.
Distributor Southern Glazer's Wine and Spirits is the 10th-largest private company in the U.S. and will generate about $26 billion in 2023 revenue from sales to retail customers, the FTC said in announcing the lawsuit Thursday.
“Currently, Southern sells one in three bottles of wine and spirits purchased in the United States,” says the lawsuit filed in federal court in Los Angeles.
The complaint states that since at least 2018, Southern Glazer's Wine and Spirits has denied smaller businesses access to markdowns and markdowns, harming their ability to compete with large national and regional chain stores.
The lawsuit alleges that the retailer violated the Robinson-Patman Act by providing “deep discounts” to a certain group of retailers without doing so in line with the market.
“When local businesses are squeezed because of unfair pricing practices that favor big chains, Americans see less choice and pay higher prices — and communities suffer,” FTC Chairwoman Lina Khan said in a statement.
“The law says companies of all sizes should be able to compete on a level playing field,” Khan said. “Law enforcement has ignored this congressional mandate for decades, but the FTC’s actions today will help protect fair competition, reduce prices and restore the rule of law.”
Khan voted with two FTC commissioners to approve the lawsuit. Two commissioners voted against the lawsuit, including Andrew Ferguson, whom President-elect Donald Trump picked on Tuesday to replace Khan as FTC chairman in January.
Ferguson said in a dissenting statement that the FTC has not filed a lawsuit under the Robinson-Patman Act in nearly a quarter century. He also wrote that “Southern is likely to succeed in its cost justification defense” and that he had not seen enough evidence to show more than a very minor harm to competition.
In a statement responding to the lawsuit, Southern Glazer's said, “Southern Glazer's vigorously disputes the FTC's allegations and will vigorously defend itself in this litigation,” which the company called “both misguided and legally flawed.”
“The FTC's lawsuit involves the use of volume discounts that Southern Glazer's – and nearly every consumer goods retailer in the country – uses to reduce customers' costs and allow consumers to enjoy lower prices on everyday goods to pay for the supplies they need,” the company said.
Southern Glazer's said it offers varying discounts that reflect the costs of selling varying amounts of wine and spirits to customers. These discounts and prices “do not violate the RPA,” the company said.
Southern Glazer's distributes thousands of wine and spirits brands for many major suppliers, including Pernod Ricard, the supplier of Jameson Irish Whiskey and Absolut Vodka; Bacardi USA, the supplier of Patron Silver Tequila, Gray Goose Vodka and Bacardi Rum; Diageo, the supplier of Smirnoff Vodka; and Suntory Global Spirits, the supplier of Jim Beam Bourbon and Maker's Mark Whiskey, the FTC said.
The agency has been investigating Southern Glazer for more than a year.
In October 2023, the FTC filed a petition in federal court requesting enforcement of its administrative subpoena to Total Wine seeking documents and other records as part of this investigation.
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