The Federal Trade Commission is suing alcohol distributor Southern Glazer’s Wine and Spirits for alleged price discrimination, per a Dec. 12 filing in the U.S. District Court for the Central District of California.
The alcohol distributor allegedly offered volume discounts and rebates since 2018 to large national and regional retail chains while withholding access to similar offerings for smaller independent businesses.
“When sellers withhold access to volume discounts from independent businesses or agree to secret rebate schemes with favored chain stores, they threaten the viability of independent businesses that give consumers a choice in the market,” according to an FTC press release. “This loss of choice and competition creates market conditions that can ultimately raise prices for consumers.”
Southern Glazer’s said in a Dec. 12 statement it “strongly disputes the FTC’s allegations,” calling the suit “both misguided and legally flawed.”
“Operating in the highly competitive alcohol distribution business, we offer different levels of discounts based on the cost we incur to sell different quantities to customers and make all discount levels available to all eligible retailers, including chain stores and small businesses alike,” the statement says.
The suit claims that the large-quantity discounts Southern Glazer’s offers to large retail chain customers “are not justified by cost savings achieved” by the company. The suit further alleges that Southern Glazer’s receives “discount support” from suppliers in exchange for providing more favorable pricing.
The FTC is seeking a permanent injunction to prohibit "further unlawful price discrimination by Southern against these small, independent businesses,” according to the filing.
The agency claims Southern Glazer’s alleged actions violate the Robinson-Patman Act, a law enacted in 1936 to keep distributors from providing exclusive discounts to larger corporate chains at the expense of small businesses, according to the FTC press release.
It has been over 20 years since the government filed a lawsuit alleging a violation of the Robinson-Patman Act, according to law firm Vinson & Elkins. However, the FTC has ramped up its oversight efforts since President Joe Biden issued an executive order in July 2021 authorizing the agency to more thoroughly investigate potential violations of the legislation.
“The law says that businesses of all sizes should be able to compete on a level playing field,” said Lina Khan, chair of the Federal Trade Commission, in the release. “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.”
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