The Federal Trade Commission has filed a lawsuit against Southern Glazer’s Wine and Spirits, a prominent alcohol distributor, for alleged price discrimination. According to a filing on December 12 in the U.S. District Court for the Central District of California, the distributor has been accused of offering volume discounts and rebates exclusively to large national and regional retail chains since 2018, while denying similar benefits to smaller independent businesses.
The FTC stated in a press release that such practices threaten the viability of independent businesses and limit consumer choice in the market, ultimately leading to higher prices for consumers. Southern Glazer’s, on the other hand, vehemently denies these allegations, claiming that they offer discounts based on the costs incurred to sell different quantities to all eligible retailers, including chain stores and small businesses.
The lawsuit alleges that the large-quantity discounts provided to large retail chain customers by Southern Glazer’s are not justified by cost savings and that the company receives “discount support” from suppliers in exchange for favorable pricing. The FTC is seeking a permanent injunction to prevent further price discrimination against small, independent businesses by the distributor, citing violations of the Robinson-Patman Act.
The Robinson-Patman Act, enacted in 1936, aims to prevent distributors from favoring larger corporate chains over small businesses through exclusive discounts. The government’s lawsuit against Southern Glazer’s marks the first in over two decades alleging a violation of this legislation. The FTC has increased its enforcement efforts following an executive order by President Joe Biden in July 2021, empowering the agency to investigate potential violations more rigorously.
FTC Chair Lina Khan emphasized the importance of fair competition and price integrity, stating that businesses of all sizes should be able to compete on a level playing field. The action taken by the FTC aims to protect fair competition, lower prices, and uphold the rule of law in the industry.
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