The largest alcohol distributor in the United States, Southern Glazer’s Wine and Spirits, is being sued by the Federal Trade Commission. They are being sued for allegedly discriminating against small businesses on the basis of pricing. According to the FTC, Southern Glazer’s disadvantages smaller retailers by providing discounts and rebates to big chains without providing economic justification.
Southern Glazer’s intends to defend itself in court and refute the accusations.
The largest wine and spirits distributor in the United States was sued by the Federal Trade Commission on Thursday. The main reason is for allegedly engaging in unlawful discrimination against small and independent enterprises.
The FTC said in the California action that Southern Glazer’s Wine and Spirits denies smaller businesses access to the same discounts and rebates that larger chains enjoy, so placing the smaller retailers at a competitive disadvantage.
FTC Chair Lina Khan said in a statement.
“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,”
Miami-based Southern Glazer called the lawsuit “both misguided and legally flawed.”
The company said
“Alcohol distributors face numerous regulations that dictate how they compete and can price and discount products, and Southern Glazer’s complies with those legal requirements,”. “Southern Glazer strongly disputes the FTC’s allegations and will defend itself vigorously in this litigation.”
According to the FTC, Southern Glazer’s is one of the biggest privately held businesses in the United States, generating $26 billion in revenue from the sale of wine and spirits to retail consumers in 2023. It supplies commercial clients like Total Wine, Costco, and Kroger and distributes one in three bottles of wine and spirits in the United States.
The 1936 Robinson-Patman Act, which only allows volume discounts. If a seller can show they realize true cost reductions, is the basis for the FTC’s lawsuit.
The FTC claims that Southern Glazer frequently gives large purchasers quantity discounts and rebates that aren’t supported by the variations in product distribution costs. Southern Glazer’s has occasionally imposed noticeably increased costs for blocked larger chains.
The FTC said that even when smaller stores might take advantage of the deals, Southern Glazer’s fails to notify them about quantity discounts, rebates, and other exclusive offers that are accessible to larger chains.
In order to stop additional pricing discrimination, the FTC is requesting an injunction in the Central District of the U.S. District Court for California.
