The Federal Trade Commission filed a lawsuit against Southern Glazer’s Wine & Spirits, alleging that the alcohol beverage distributor company violated the Robinson-Patman Act by engaging in unlawful price discrimination.

Filed in the U.S. District Court for the Central District of California, the FTC’s Dec. 12 lawsuit claims that Southern Glazer’s charged independent retailers significantly higher prices for identical bottles of wine and spirits compared to larger chains, such as Total Wine & Spirits, Costco and Kroger.

The Robinson-Patman Act prohibits sellers from engaging in price discrimination that harms competition by charging higher prices to less favored retailers purchasing similar goods.

“When local businesses get squeezed because of unfair pricing practices that favor large chains, Americans see fewer choices and pay higher prices — and communities suffer,” FTC Chair Lina Khan said in the FTC’s release. “The law says that businesses of all sizes should be able to compete on a level playing field.”

The lawsuit said that Southern Glazer’s pricing practices — including quantity discounts and rebates — have caused smaller retailers to lose customers and market share. The FTC vote was 3-2 in favor of authorizing a permanent injunction.

Responding to the lawsuit on Dec. 12, a Southern Glazer’s news release described the Robinson-Patman Act as a “Depression-era federal antitrust law that has not been enforced for decades due to bipartisan concerns that enforcing it could lead to higher prices for consumers.”

The company implied that the types of volume discounts that it offers are in line with that of “nearly every distributor of consumer products in the country” and pointed to reasoning cited by the two dissenting FTC commissioners about how the enforcement action is “both misguided and legally flawed.”

“Alcohol distributors face numerous regulations that dictate how they compete and can price and discount products, and Southern Glazer’s complies with those legal requirements,” the company said in its release. “Southern Glazer’s strongly disputes the FTC’s allegations and will defend itself vigorously in this litigation.”

The company went on to note that it offers different levels of discounts based on costs it incurs to sell different quantities to customers and that it makes all discount levels available to all eligible retailers, including chain stores and small businesses alike.

“Our pricing and discounting structure does not violate the RPA.,” the company said.

Miami-based Southern Glazer’s was on MDM’s unranked list for 2024 Top Food & Beverage Distributors. The FTC noted that the company generated roughly $26 billion in 2023 revenues from wine and spirit sales to retail customers, making it the 10th largest privately held company in the U.S.

Southern Glazers is a distributor for numerous major wine and spirits suppliers that include Pernod Ricard (Jameson Irish Whiskey, Absolut Vodka), Bacardi U.S.A., Inc. (Patron Silver Tequila, Grey Goose Vodka, Bacardi Rum), Diageo (Smirnoff Vodka, Aviation Gin), and Beam Suntory (Jim Beam Bourbon, Makers Mark Whiskey).

The family-owned company has operations in 44 states and Canada, as well as brokerage operations in the Caribbean, Central and South America.

See the FTC’s news release here.

See Southern Glazer’s news release here.

To read more about the lawsuit, click here.