Southern Glazer’s Wine and Spirits, the United States' largest distributor of wine and spirits, faces a lawsuit from the Federal Trade Commission for alleged price discrimination.
The FTC accused the company of giving large discount chains such as Costco and Walmart price breaks while charging small independent stores a higher price. Federal officials say that Southern Glazer's violated the Robinson-Patman Act. The FTC says that the act prohibits companies from giving their favored customers an unfair advantage in the market.
The commission voted 3-2 in favor of filing the lawsuit.
The FTC says this price discrimination hurts small businesses and stifles competition.
“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,” said FTC Chair Lina M. Khan. “The law says that businesses of all sizes should be able to compete on a level playing field. Enforcers have ignored this mandate from Congress for decades, but the FTC’s action today will help protect fair competition, lower prices, and restore the rule of law.”
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Southern Glazier's disagreed with the FTC's allegations.
“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 said in a statement. "Dissents filed by Commissioners Holyoak and Ferguson articulate reasons why this enforcement action—aimed at an industry that is already heavily regulated by the states pursuant to the 21st Amendment of the U.S. Constitution and by the U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau—is both misguided and legally flawed."
The National Grocers Association has encouraged the FTC to be more aggressive in enforcing the Robinson-Patman Act. The group representing independent grocers says more needs to be done to protect small businesses.
“Grocery consolidation has made it extremely challenging for independent, family-run supermarkets to compete, as national chains have been allowed to illegally demand special pricing and treatment from suppliers for decades,” said NGA chief government relations officer and counsel Chris Jones. “By enforcing Robinson-Patman, the FTC is simply upholding good law, honoring Congress’ intent to level the playing field between local Main Street businesses and powerful Wall Street interests."
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