Report: FTC Planning Lawsuit Against Largest US Alcohol Distributor

Facts

• Politico has reported that the US Federal Trade Commission (FTC) is planning to sue Southern Glazer's Wine and Spirits — the largest alcohol distributor in the US — for allegedly giving favorable pricing to larger retailers over smaller ones.¹
• According to four anonymous sources, FTC staff have recommended suing the distributor under the Robinson-Patman Act, a 1936 law passed to stop suppliers from offering favorable prices to certain retail customers instead of others. It's been 20 years since the FTC last brought a case under that law.¹
• Representatives for Southern, which purportedly controls approximately 20% of the US wine and spirits wholesaling market, will reportedly lobby against the suit to FTC chair Lina Khan. Neither the company nor FTC have publicly commented on the matter.²
• Last year, the FTC previously filed for a federal court order requesting Total Wine, a large retailer, provide documentation related to an investigation into Southern's business practices.³
• Additionally, in 2021, US Pres. Joe Biden issued an order on competition policy that referred to stopping 'unlawful trade practices' in the alcoholic beverage industry, including anti-competition and discriminatory practices.³
• The FTC has not made a final decision on whether to move forward with this lawsuit. If it proceeds, the FTC could file the case in federal court or in its in-house administrative court.¹

Sources: ¹Politico, ²Independent and ³The Drinks Business.

Narratives

• Pro-establishment narrative, as provided by PYMNTS.com. Protecting smaller retailers and companies from being boxed out by large companies who stifle competition by manipulating pricing is at the forefront of the Biden administration's efforts to make sure the economy is a level playing field. At the same time, enforcing antitrust laws to their fullest extent by filing lawsuits like this is the best way for the government to assure consumers they're paying the fairest prices for goods.
• Establishment-critical narrative, as provided by CNBC. If the FTC's goal is to make sure consumers are paying fair prices, it should be careful bringing a suit under a law that's nearly a century old and hasn't been used in a quarter-century. Robinson-Patman could make it illegal to offer discounts that typically reduce costs for customers. The government may be overreaching in this instance.