FTC settles price discrimination case with Southern Glazer's, the largest US wine and spirits distributor
The FTC calls its proposed settlement with Southern Glazer's a "successful conclusion" to its first Robinson-Patman Act enforcement action in a generation. The proposed order, which awaits court approval, sets payment terms for pricing that allegedly disadvantages independent retailers.
What we know
- The FTC announced a settlement with Southern Glazer's Wine and Spirits LLC, which it calls the nation's largest wine and spirits distributor, resolving a 2024 lawsuit alleging illegal price discrimination. [1] [2]
- The proposed order covers nearly all Southern wine and spirits sales to the five largest chain retailers in 26 states and would last six years under an independent monitor. [2]
- Where a set of discriminatory paired transactions meets certain specifications, Southern can resolve a violation by paying the independent retailer 1.5 times the full aggregated price differential. If Southern does not redress the discrimination, the FTC can bring an enforcement action, and if it prevails, Southern must pay double the aggregated price differentials. [2]
- The Commission voted 2-0 to issue the order, which was filed in the U.S. District Court for the Central District of California and has legal force once a judge approves and signs it. [2]
- Not yet confirmed: The order has not yet been approved by the district court judge. The price discrimination allegations come from the FTC's 2024 complaint, and the sources do not say Southern admitted to them.
The Federal Trade Commission said in a post on X that it secured a settlement that protects small businesses from illegal price discrimination. [1] The agreement is with Southern Glazer's Wine and Spirits LLC, which the agency describes as the nation's largest distributor of wine and spirits. [2]
The settlement resolves a lawsuit the FTC filed in 2024. The complaint alleged that Southern violated the Robinson-Patman Act by denying small, independent retailers discounts and rebates available to large competitors. According to the FTC, Southern charged independent stores significantly more for identical bottles during the same period than it charged chains such as Total Wine, Walmart and Kroger, even when stores were a few blocks apart. [2]
Under a proposed stipulated order, Southern would be in violation if, among other conditions, paired transactions involve significant price discrimination, above a threshold based on state-specific operating costs, and recurring price discrimination exceeding $5,000 in total over 12 months. [2]
If a set of paired transactions meets certain specifications, Southern can resolve the violation by paying the independent retailer 1.5 times the full aggregated price difference. If Southern does not redress the discrimination, the FTC can bring an enforcement action, and if the Commission prevails, Southern must pay double the aggregated difference. [2]
The order would run for six years and be overseen by an independent monitor. It covers Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Hawaii, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Minnesota, Missouri, Nebraska, Nevada, New Mexico, New York, North Dakota, Oklahoma, South Carolina, Tennessee, Texas and Washington. [2]
"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," said Daniel Guarnera, Director of the FTC's Bureau of Competition. [2]
The FTC said the Commission voted 2-0 to issue the order. Chairman Andrew N. Ferguson and Commissioner Mark R. Meador issued separate statements. The agency noted that stipulated orders take legal effect only after a district court judge approves and signs them. [2]