The Largest Alcohol Distributor In The U.S. May Be Sued By The FTC Over Pricing

If filed, this will be the first time the FTC has presented a case under the law in over 20 years.

The Federal Trade Commission (FTC) is preparing a lawsuit against Southern Glazer’s Wine and Spirits over how it prices and sells spirits across the United States.

Southern Glazer – the largest alcohol distributor in the U.S. – has been investigated by the FTC since 2023, prompting a lawsuit to be filed under the Robinson-Patman Act, legislation dated back to 1936. The law is designed to prevent suppliers from offering favorable pricing to specific customers over others.

If filed, this will be the first time the FTC has presented a case under the law in over 20 years. The last case tried under the law settled with spice conglomerate McCormick in 2000. Before that, the previous case happened in 1988 against book publishers Simon & Schuster and Random House.

While the decision has not yet been finalized, the FTC’s five commissioners, led by Chair Lina Khan, are planning to meet with the company, and a case could be finalized as early as June 2024. Two different filings could occur — one in federal court or in-house administrative court. If the filing is executed, the agency may be able to prohibit the company from implementing the offending business practices.

According to a report from Forbes in 2023, Southern Glazer is the 10th largest privately held company in the U.S., with an estimated $26 billion in revenue and 24,000 employees. The company distributes more than 7,000 different brands of alcohol, wine, beer, and other drinks across the nation.

The agency opened a similar investigation into Pepsi and Coca-Cola in 2022 involving the pricing of soft drinks and Kraft-Heinz products, according to Politico.

Under the leadership of Khan and fellow commissioner Alvaro Bedoya — both appointees of President Joe Biden, the agency’s goal is to regain enforcement of the legislation with the argument that the agency should be able to enforce a law already on the books. According to The Independent, the Biden Administration has worked to limit the trend of market abuses since 2021 by eliminating verbiage from the Reagan Administration’s U.S. antitrust law.

An executive order was signed in July of the same year specifically targeting “beer, wine, and spirits markets,” instructing the FTC to report back on any “exclusionary, discriminatory, or anticompetitive distribution practices that hinder smaller and independent businesses or new entrants.” Larger companies, such as Apple, Amazon, and Facebook’s parent company, Meta, have also faced lawsuits based on antitrust legistlation.

In addition, the Alcohol Tax and Trade Bureau of the Treasury Department also has a say in the rules surrounding how alcohol is sold.