FTC Slams Southern Glazer’s With Lawsuit Over Illegal Pricing

The Federal Trade Commission (FTC) is accusing Southern Glazer’s Wine and Spirits of illegal price discrimination. The agency claims America’s largest wine and spirits distributor gave large retailers, like Costco and Kroger, lower prices than smaller, independent liquor stores.

Allegedly, Southern charged significantly higher prices to “mom and pop” stores than the large chains. For many years, Southern has denied small businesses available discounts and rebates, which made it difficult for them to effectively compete against chain stores. The FTC states the distributor’s actions are a violation of the Robinson-Patman Act.

“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,” noted FTC Chair Lina M. Khan in a press release. “The law says that businesses of all sizes should be able to compete on a level playing field.”

Southern Glazer’s is a massive distributor, with revenue hitting $26 billion last year. It is among the top 10 largest privately held companies in the country. According to federal documents, one-third of all bottles of wine and liquor purchased in the U.S. are sold by Southern. It distributes for multiple alcohol suppliers such as Bacardi, Diageo, and Pernod Ricard.

Southern Glazer’s Wine & Spirits Responds to FTC Lawsuit

Southern Glazer’s quickly reacted to the FTC’s action, saying it will “vigorously” fight the allegations. The distributor claims it did not violate the Robinson-Patman Act and offers discounts and pricing that reflect the costs involved in selling various quantities to customers.

“The FTC’s lawsuit takes issue with the use of volume discounts that Southern Glazer’s — and nearly every distributor of consumer products in the country — uses to lower customers’ costs and enable consumers to pay lower prices for the everyday goods they need,” the company stated.

The FTC’s investigation of Southern Glazer’s has been going on for at least a year. After Total Wine, a Southern customer, failed to provide subpoenaed documents and records, the agency asked a federal court to enforce a civil investigative demand in October 2023.

In addition to Southern Glazer’s, the FTC has been busy looking into other potential pricing and profit schemes. In August, the government regulator began investigating the reports of price hikes at grocery stores.