The United States Federal Trade Commission (FTC) prepares to file an antitrust lawsuit against Southern Glazer’s Wine and Spiritsthe largest alcohol distributor in the country, for alleged “secret bribes” to large retail clients.
This action could begin in the coming weeks, according to two sources. CNBC. The lawsuit is expected to allege that the company has violated the Robinson-Patman Law of 1936, which prohibits offering better prices to one buyer over another for the same product.
Southern Glazer’s, based in Florida, distributes alcohol for more than 7,000 brands in 44 states. Founded in 1968, the company serves as a middleman between alcohol producers and liquor stores. In 2023, it reported revenues of $26 billion, according to Forbes.
The Robinson-Patman Law is an antitrust law that has not been applied since 2000 and its interpretation by the FTC It does not imply a total prohibition of price discrimination, allowing volume discounts. However, the law only applies when Price discrimination practices affect competitiona position that FTC defined as legally “complex” to prove.
Critics say this law could inadvertently prohibit discounts that could help reduce prices for consumers, something worrying for the president. Joe Bidenwhose economic platform focuses on lowering costs.
The alcohol industry’s fragmented regulatory structure, with state-specific distribution laws, adds difficulty to the FTC’s potential litigation against Southern Glazer’s, according to one of the sources cited by CNBC. Spokespeople for both the Federal Trade Commission and Southern Glazer’s declined to comment on the matter.
A possible litigation of the FTC would be the latest in a series of aggressive legal actions under the administration of Joe Biden, which have characterized his antitrust stance. During fiscal year 2022, the FTC presented 24 challenges to block potential mergers.
Companies like Meta, Amazon, Microsoft and Kroger have faced similar actions over the past three years. Lina Khan, president of the FTC, assured at the CEO Council Summit of CNBC in Washington, that “we are living in a regime where agreements were being approved that were clearly illegal. That means that then we have to spend public resources going to court.”
The FTC’s actions against Southern Glazer’s would not be the first they have faced for anticompetitive business practices. In 2022, alcohol distribution startup Provi, formerly known as Tiz Inc., sued Southern Glazer’s and another major alcohol distributor, Republic National Distributing Company, the agency confirmed. Reuters.
Provi alleged that these alcohol giants had agreed to boycott the startup and encouraged other retailers to avoid doing business with them, thus blocking their ability to compete in the industry.. A judge rejected requests for Southern Glazer’s and Republic National to dismiss the case Provi.
