Why The Federal Government Might Be Suing The Nation’s Biggest Booze Distributor
A rarely used law could be cited in a forthcoming antitrust case.
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Subscribe for free to get more stories like this directly to your inboxBy its very nature, the alcohol industry is strictly regulated to prevent, among other things, unauthorized sale to minors. But there are plenty of other laws that distributors of beer, wine, and liquor must follow that apply to all businesses.
And the largest distributor currently operating in the U.S. is accused of running afoul of regulations aimed at preventing the formation of monopolies.
A possible lawsuit
According to recent reports, the Federal Trade Commission is considering legal action against Southern Glazer’s Wine and Spirits based on complaints that the Florida-based company offered “secret kickbacks” and encouraged boycotts to prevent rivals from gaining a foothold in the industry.
Here’s what sources are saying at this point:
- The company potentially violated the Robinson-Patman Act, which bans discriminatory pricing meant to limit competition.
- It’s been nearly a quarter of a century since prosecutors have cited the 1936 law in a case.
- The FTC has not finalized its decision, but a lawsuit could be filed against the company within a few weeks.
Southern Glazer’s has been in operation for nearly 60 years and distributes thousands of brands across 44 U.S. states.
A competitor’s claim
The latest legal dust-up stems from accusations from Provi, a significantly smaller alcohol distributor. A 2022 lawsuit against both Southern Glazer’s and Republic National Distributing Company for allegedly conspiring to convince retailers not to do business with Provi.
The two defendants in that suit petition to dismiss the case, but a judge denied that request late last month, potentially paving the way for FTC action.
Since alcohol distribution is generally regulated at the state level, federal authorities will face some headwind in any attempt to pursue a lawsuit — but FTC Chair Lina Khan has repeatedly shown her willingness to take action against companies accused of violating antitrust laws.
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