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FTC Poised to Sue Largest US Alcohol Distributor Over Pricing Practices

 |  June 4, 2024

The Federal Trade Commission (FTC) is reportedly preparing to file a lawsuit against Southern Glazer’s Wine and Spirits, the nation’s largest alcohol distributor, over alleged anti-competitive pricing practices. This lawsuit would be filed under a seldom-used antitrust law from 1936, according to sources cited by Politico.

The FTC has been investigating Southern Glazer’s for potential violations of the Robinson-Patman Act, a law that prohibits companies from discriminating against smaller suppliers through unfair pricing tactics. The act, which has not been the centerpiece of an FTC case in over two decades, aims to prevent large companies from stifling competition by manipulating prices to disadvantage smaller competitors.

Southern Glazer’s, based in Florida, controls approximately 20 percent of the U.S. wine and spirits wholesaling market. In certain states, it operates in a near duopoly with its closest competitor. The company’s substantial market influence has drawn scrutiny from antitrust regulators concerned about potential market abuses and the impact on smaller businesses and consumers.

The FTC’s investigation is part of a broader initiative by the Biden administration to address market abuses by enforcing antitrust laws more rigorously. Since 2021, the administration has sought to move away from the narrow interpretation of U.S. antitrust laws that has prevailed since the Reagan era. An executive order issued in July 2021 explicitly targeted the beer, wine, and spirits markets, directing the FTC to investigate and report on any exclusionary, discriminatory, or anti-competitive distribution practices.

Unnamed sources indicate that FTC officials have recommended proceeding with the lawsuit against Southern Glazer’s, with a decision potentially coming as soon as this month. Representatives from the company are expected to lobby FTC Chair Lina Khan and other commissioners in an attempt to avert the lawsuit.

Source: Politico