The Federal Trade Commission secured a settlement agreement with Southern Glazer’s Wine and Spirits LLC. The settlement addresses allegedly illegal price discrimination practices by the nation’s largest distributor of wine and spirits.

The proposed stipulated order will remain in effect for six years. An independent monitor will oversee compliance with the terms of the agreement.

The settlement covers nearly all Southern Glazer’s wine and spirits sales to the five largest chain retailers in 26 states. Recurring price discrimination is defined under the order as exceeding $5,000 over a 12-month period in the aggregate.

Southern Glazer’s can resolve a violation by paying the independent retailer 1.5 times the full aggregated price-differential amount. If the Commission prevails in an enforcement action, Southern Glazer’s must pay the independent retailer double the aggregated price differentials.

The Commission vote to issue the proposed stipulated order was 2-0. This is the Federal Trade Commission’s first enforcement action under the Robinson-Patman Act in a generation.

Daniel Guarnera said this settlement marks a significant milestone for the FTC in its enforcement of the Robinson-Patman Act, which Congress enacted to empower small businesses to compete against large ones.

What's New

Southern Glazer’s Wine and Spirits LLC generated $26 billion in revenue from wine and spirits sales to retail customers in 2023, making it the tenth largest privately held company in the U.S. The company is the largest coast-to-coast distributor of wine and spirits in the United States, selling one out of every three bottles of wine and spirits purchased in the U.S. Primary source: ftc.gov

The FTC’s lawsuit against Southern Glazer’s marked the first enforcement action under the Robinson-Patman Act in over 30 years, as the agency had largely abandoned the law by the 1970s due to concerns about stifling competition. The FTC’s lawsuit against Southern Glazer’s was part of a broader effort under former Chair Lina Khan to revive enforcement of the Robinson-Patman Act, contrasting with the agency’s historical reluctance to pursue such cases. Primary source: ftc.gov

The FTC’s lawsuit against Southern Glazer’s was the first litigated Robinson-Patman Act case brought by the federal government in over a generation. The FTC’s case against Southern Glazer’s was initially opposed by current FTC Chairman Andrew Ferguson, who argued that the case was weak despite supporting enforcement of the Robinson-Patman Act. Primary source: ftc.gov

The FTC’s complaint included allegations that Southern Glazer’s had engaged in price discrimination since at least 2018, continuing into the present day. The FTC’s settlement with Southern Glazer’s includes a six-year monitoring period overseen by an independent monitor, a standard requirement in major antitrust settlements to ensure compliance with court orders. Primary source: ftc.gov

Why It Matters

The Robinson-Patman Act was enacted in 1936 during the Great Depression to prevent suppliers from offering discriminatory pricing to large chains, which lawmakers feared would eliminate competition from small businesses. The law was designed to prevent suppliers from offering discriminatory pricing to large chains that could harm smaller competitors. Primary source: ftc.gov

The FTC’s complaint alleged that Southern Glazer’s engaged in price discrimination by charging small, independent retailers significantly higher prices than large chains such as Costco, Kroger, and Total Wine & More. Southern Glazer’s serves as the distributor for major alcohol brands including Pernod Ricard, Bacardi, Diageo, and Beam Suntory, giving it influence over pricing and availability in the U.S. market. Primary source: ftc.gov