The US Federal Trade Commission (FTC) has initiated legal proceedings against Southern Glazer’s Wine and Spirits, a distributor in the alcoholic beverages sector, on charges of illegal price discrimination.
The lawsuit accuses the company of violating the Robinson-Patman Act for some years, disadvantaging smaller, independent retailers by denying them equitable access to discounts and rebates.
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The Robinson-Patman Act prohibits sellers from engaging in discriminatory pricing that impairs competition among retailers purchasing similar products.
Southern’s practice is alleged to not only have hindered these businesses from competing with larger entities, but also diminished consumer options and inflated prices.
The FTC contends that Southern has been selling its products to small shops at significantly higher rates compared to the substantial discounts offered to big national and regional chains.
Such discriminatory pricing creates an unfair marketplace where smaller retailers cannot match the benefits enjoyed by their larger counterparts, resulting in a competitive imbalance.
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By GlobalDataThe FTC’s current lawsuit aims to ensure a fair competitive environment where all businesses, regardless of size, have equal opportunity to benefit from discounts and rebates, enhancing consumer choice and enabling independent retailers to offer more competitive prices.
FTC chair Lina Khan stated: “When local businesses get squeezed because of unfair pricing practices that favour large chains, Americans see fewer choices and pay higher prices — and communities suffer.
“The law says that businesses of all sizes should be able to compete on a level playing field. 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.”
Since at least 2018, the FTC alleges that Southern has consistently engaged in discriminatory pricing against independently owned stores while favouring large chain purchasers such as Total Wine & More, Costco and Kroger.
In 2023, Southern Glazer’s reported $26bn in revenue from its wine and spirits sales to retail customers.
The company serves as a key distributor for major suppliers such as Pernod Ricard, Bacardi USA, Diageo and Beam Suntory.
The FTC alleges that Southern Glazer’s has systematically implemented discriminatory pricing as a core element of its business strategy through various pricing mechanisms.
Preferential prices offered to larger chains are not reflective of any cost savings in distribution, nor are they competitive responses to rival distributors’ pricing strategies.
The FTC asks the court to issue a final judgment against Southern, grant both preliminary and permanent injunctive relief, direct Southern to stop engaging in price discrimination and provide any additional relief the court considers appropriate.
